GigaCloud Responds to Grizzly's Short-Seller Report
GigaCloud, 5/23/24
GigaCloud Technology (Nasdaq: GCT), a Chinese provider of global end-to-end B2B technology solutions for large parcel merchandise, today issued the following statement in response to the claims made in a report by Grizzly Research LLC, a short-seller, issued on May 22, 2024.
"The short-seller report lacks merit and contains numerous defamatory, selective, inaccurate, incomplete and misleading statements, speculation, and innuendo. The report demonstrates a fundamental lack of understanding of GigaCloud's business particularly with respect to the types of buyers who use our marketplace and the services we provide them.
Web Traffic
The first allegation in the short-seller report is that GigaCloud's "web traffic does not square with its growth story." The report misleadingly cites third-party data search traffic - but this does not reflect overall visitor traffic to GigaCloud's website. Indeed, as explained by the third-party cited in the short-seller report, the "Domain Overview" and "Organic Traffic" data provide data regarding search engine performance.
This third-party also explains that "estimates of total website traffic" are found in their "Traffic Analytics" tool. The report omits this data, which shows significant web traffic measured by visits to GigaCloud's website of roughly 130,000 total visits and 11,000 unique visitors during April 2024, according to this third-party's estimates.
GigaCloud's marketplace is a business-to-business (B2B) platform, not a consumer-direct business. As previously disclosed, buyers in GigaCloud's marketplace are typically resellers (rather than end consumers) and this level of website traffic is fully consistent with GigaCloud's disclosures that it had approximately 5,010 active buyers on its marketplace during 2023.
In other words, GigaCloud's business model is to sell in volume to a smaller number of customers than if it operated a consumer-direct business. In focusing only on search activity, the short-seller report misapprehends the nature of GigaCloud's business and misstates the overall traffic to GigaCloud's marketplace.
Related Party Transactions
The short-seller report claims that the purported lack of website activity is explained by allegedly undisclosed transactions with related parties. This claim is false and misleading for the reasons noted above: GigaCloud's B2B marketplace has substantial monthly traffic. There is also no merit to the claims the short-seller makes about purported related party transactions. Following similar unsubstantiated allegations made in September 2023 by another short-seller, GigaCloud carefully evaluated its customer relationships and has disclosed in its filings made with the U.S. Securities and Exchange Commission all related party transactions required by the applicable rules and accounting standards.
There is also no basis in the short-seller's unsupported suggestion that sales made through certain entities are not legitimate. As GigaCloud previously disclosed, buyers in its marketplace can list products for sale to consumers on their own stores or other ecommerce websites and GigaCloud will handle fulfilment directly to their end customer. These transactions represent legitimate sales that can be validated through the records of deliveries to end customers and are corroborated by the substantial expenses GigaCloud has previously reported for delivery and logistics services.
The balance of the short-seller report consists of malicious personal attacks and unsupported innuendo. Investors are cautioned that the claims come from a short-seller who admits on its website that: (1) its views are "not statements of fact," (2) it makes "no representation" as to the accuracy of information in its report, and (3) it "will realize significant gains in the event the prices of [GigaCloud's stock] declines." Investors are encouraged to review materials filed by GigaCloud with the SEC and available on GigaCloud's investor relations website."
Sending
