Pomerantz Appointed Lead Counsel in Yalla Group Securities Litigation

On November 8, 2021, U.S. District Judge Paul A. Engelmayer of the Southern District of New York appointed Pomerantz LLP as Lead Counsel on behalf of Peifa Xu and Yongjun Li, Lead Plaintiffs in Crass v. Yalla Group Limited, 21-cv-6854 (S.D.N.Y.), a securities action brought on behalf of a class of defrauded investors concerning allegations that Yalla Group Limited (“Yalla” or the “Company”) had made false and misleading statements and omitted material facts which concealed that the Company’s user metrics, reported revenues and cash balances were substantially lower than publicly represented.

Yalla is a voice-centric social networking and entertainment platform that operates mainly in the Middle East and Northern Africa region.

Allegations against Yalla include that it overstated its user metrics and revenue.

The truth began to emerge on May 19, 2021, Swan Street Research published a report titled “Is Yalla Group a Multi $B Fraud? The ‘Clubhouse of the Middle East’ UAE Tech Unicorn that Never Was,” alleging that the Company had inflated its financial metrics, including its user data and its revenue, and characterized Yalla’s financial statements as “not credible.”

On this news, the price of Yalla ADSs fell $1.31 per share, or 7.15%, to close at $17.01 per share on May 19, 2021.

On May 20, 2021, analyst The Bear Cave issued a report titled “Problems at Yalla Group.” The same day, Gotham City Research also tweeted that it was shorting Yalla ADSs.

On this news, the price of Yalla ADSs fell a further $1.05 per share, or 6%, to close at $15.96 per share on May 20, 2021.

Then, on August 9, 2021, Yalla announced its second quarter 2021 financial results, including $66.02 million in revenue, which did not meet analysts’ expectations.

On this news, the price of Yalla ADSs fell a further $2.56 per share, or 18.9%, to close at $10.99 per share on August 10, 2021.