Do you remember that at the end of last year, an Internet company called Dada Group was listed on the NASDAQ in the United States, which attracted a lot of attention and heated discussions. The company claims to be the largest provider of advertising and marketing services in China, with more than 100 million active users and advertisers and partners from all walks of life. Dada Group's IPO valuation is as high as US$10 billion, making it one of the most popular Chinese concept stocks in 2023.
However, less than a month after its listing, Dada Group broke out a shocking scandal: the company found that the advertising revenue data was suspicious during the self-inspection process, and it would entrust a third party to re-audit. This means that Dada Group may have committed serious financial fraud and is suspected of defrauding investors and regulators. As soon as this news was announced, it triggered panic and anger in the market, and the share price of Dada Group echoed the **, close to "halving", and the market value evaporated by nearly half. What's going on here? Why would Dada Group do such a thing?
According to Dada's announcement, the company currently estimates that about RMB500 million in advertising and marketing service revenue and RMB500 million in operating and support costs in the first three quarters of 2023 may be overstated. This means that Dada's advertising revenue may have been nearly doubled, while operating costs may have been inflated by nearly half. Such an operation is undoubtedly to beautify the company's financial situation, attract the attention of investors, and increase the valuation of the listing.
According to **, Dada Group's main modus operandi is to generate advertising revenue through fake traffic and clicks. Dada Group has a huge traffic platform, including Dada.com, Dada**, Dada Live and other ** and applications. On these platforms, there is a large amount of content and **, which attracts a lot of users to browse and **. However, the quality of these contents and ** is uneven, and even many of them are plagiarized, pirated, vulgar, and illegal. Dada doesn't care about any of that, because they have only one purpose: to provide traffic and clicks to advertisers.
Dada Group charges high advertising fees by promising advertisers a certain amount of volume and click-through rate. However, these ** volume and click-through rate are not real, but artificially created through means such as swiping, cheating, and robots. Dada Group also used internal employees and external partners to carry out false settlements and shares, so as to cover up the truth. In this way, Dada Group can obtain high revenue at a very low cost, thereby falsely enhancing the company's profitability and competitive advantage.
As soon as Dada Group's "data gate" was launched, it triggered a strong reaction from investors and regulators. Dada Group's share price rose by more than 45% in a single day, and its market value fell from $10 billion to less than $5 billion, the largest decline in the history of Chinese concept stocks. Dada's shareholders and investors have suffered huge losses, and some are even at risk of bankruptcy. Dada's reputation has also taken a serious hit, with the authenticity of its business model and values being questioned.
Dada's "data gate" may also face legal sanctions and penalties. According to the ** regulations in the United States, listed companies are obliged to disclose true, accurate and complete financial information to investors and regulators, and if they are found to have misstated or concealed material facts, they will be subject to severe penalties, including fines, trading prohibitions, delisting, criminal prosecution, etc. Dada Group has been notified of multiple class action lawsuits alleging violations of U.S. ** law by defrauding and misleading investors. Dada Group may also be investigated and punished by Chinese regulators for allegedly violating China's advertising law, anti-unfair competition law, cybersecurity law and other relevant laws and regulations.
Dada's "datagate" has also had a negative impact on China's Internet industry. The scandal of Dada Group, a US-listed Chinese concept stock, has not only damaged its own credibility, but also damaged the image and prestige of Chinese Internet companies.
Dada Group's "data gate" has made investors suspicious and distrustful of the financial data and business models of Chinese Internet companies, resulting in a general outflow of Chinese concept stocks** and capital outflows.
Dada's "datagate" has also brought pressure and challenges to the regulation and regulation of China's Internet industry, requiring Chinese Internet companies to strengthen self-discipline and compliance, improve transparency and quality, and avoid similar problems and risks.
Dada Group's "data gate" is a typical case of financial fraud and commercial fraud, which has brought us a lot of enlightenment and lessons. First of all, we need to realize that data is the core resource and competitiveness of the Internet industry, but it is also a potential risk and hidden danger in the Internet industry. The authenticity, accuracy, completeness, and security of data are the lifeblood of the Internet industry and the bottom line of the Internet industry.
Any tampering, exaggeration, forgery, and leakage of data will cause serious damage to the development and trust of the Internet industry. Therefore, we should pay attention to the quality and value of data, rather than the quantity and scale of data, follow the science and norms of data, establish and improve the monitoring and review mechanism of data, and prevent and combat data fraud and abuse.
Second, we must understand that data is not the only and ultimate goal of the Internet industry, but the means and tools of the Internet industry. The role of data is to improve the service quality and efficiency of the Internet industry, and create more value and well-being for users and society. If we ignore the needs and experience of users, the responsibilities and rules of society, and the quality and innovation of content only for the sake of pursuing the growth and optimization of data, then data will become a burden and a curse for the Internet industry.
The rational and legitimate use of data can bring huge advantages and opportunities to the Internet industry, enhance the competitiveness and influence of the Internet industry, and promote innovation and reform in the Internet industry. However, the unreasonable and illegal use of data will also bring serious risks and crises to the Internet industry, damage the credibility and prestige of the Internet industry, and trigger turmoil and crisis in the Internet industry.
Dada Group's "Data Gate" is a shocking and reflective event, which allows us to see the light and darkness of the Internet industry, and also makes us feel the opportunities and challenges of the Internet industry. We should not negate and question the overall level and development direction of China's Internet industry because of the individual cases of Dada Group, nor should we relax and ignore the self-supervision and standardization of China's Internet industry because of Dada Group's serious mistakes. Dada Group