Sunlands Technology Group
- Company Name
- Sunlands Technology Group
- Stock Symbol
- Class Period
- Purchasers of Sunlands securities pursuant to the March 2018 initial public offering
- Motion Deadline
- August 26, 2019
- Eastern District of New York
The complaint charges Sunlands, certain of its officers and directors and the underwriters of its initial public offering (“IPO”) with violations of the Securities Act of 1933. Sunlands provides online education services in the People’s Republic of China. The Company offers various degree and diploma-oriented post-secondary courses, including preparation courses for the self-taught higher education examination for learners pursuing associate diplomas or bachelor’s degrees, as well as for the entrance examination for the master of business administration program.
On February 23, 2018, Sunlands filed a registration statement on Form F-1 with the SEC, which, after subsequent amendments and the filing of a prospectus (collectively, the “Registration Statement”), would be used to complete the IPO. On March 22, 2018, the SEC declared the Registration Statement effective and Sunlands sold approximately 13 million American Depositary Shares (“ADSs”) at $11.50 per share for gross proceeds of more than $149 million.
The complaint alleges that the Registration Statement contained untrue statements of material fact and omitted to state material facts both required by governing regulations and necessary to make the statements made not misleading. Specifically, the Registration Statement failed to disclose that Sunlands’s student enrollment was declining, Sunlands’s gross billings were declining, and Sunlands’s marketing tactics were not as robust as described in the Registration Statement.
On May 28, 2019, the Company announced its unaudited first quarter 2019 financial results. Sunlands reported a 34% decrease in student enrollment and a 28% decrease in gross billings for the quarter, stating that “[a]gainst the backdrop of the seasonal slowdown due to the Chinese New Year holiday period, softer marketing tactics and expanded trial programs, [Sunlands] new student enrollments declined, and gross billings were down 28.6% year-over-year.” Since the IPO, the price of Sunlands ADSs has plummeted, and by the end of June 2019, the shares were trading at around $2.28 per share, or more than 80% below the IPO price.