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Chinese grocery e-commerce platform Missfresh’s founder Xu Zheng didn’t run away and is currently in Beijing, where the company is headquartered, said a Missfresh spokesperson, in response to market speculation that executives have “run away” amid the ongoing cash flow crisis.
The person added that the company’s senior executives are all in the city at the moment.
The company, backed by investors including Tencent and Tiger Global, has announced “temporary closure” of its on-demand distributed mini warehouse (DMW) service, involves placing smaller-sized warehouses closer to residential neighborhoods, so that orders of fresh products and other daily essentials can be delivered within a shorter time span.
Notably, the DMW business accounted for 85% of Missfresh’s total net revenues for the nine months ended in September 2021, according to the company’s data.
The firm said on Thursday that the business shutdown is part of business and organizational adjustments and some employees have been told to leave, adding that it’s exploring all possible solutions to safeguard employees’ rights and interests.
Missfresh also said it will “make every effort” to keep operating the company’s other business units including its retail cloud and next-day delivery service.
Chinese mainland media reported that in the period of June 30 – July 2, Missfresh closed the key delivery business in nine Chinese cities including Shenzhen and Shijiazhuang. The company confirmed in response that it temporarily suspended the business in the cities where consumers can no longer buy fresh products.
The crisis comes just over a year after its IPO on the Nasdaq, when the company raised $273 million at a valuation of $2.8 billion. But its shares, which had already lost 98% of their value since the debut, plunged by another 43% on Thursday to just $0.14 a share.
Founded in 2014 by former Lenovo executive Xu Zheng, Missfresh’s costs and losses had ballooned, and the company was unable to publish its 2021 annual reports on time after discovering what it later described as “questionable transactions.” It had estimated in April that its net loss could have more than doubled to as much as $558 million in 2021.
The US Securities and Exchange Commission (SEC) had warned Missfresh in June that it no longer met the Nasdaq’s listing requirements as the shares had traded below $1 for the last 30 consecutive business days.
The company, which has until the end of November to achieve compliance, is also contending with several class-action lawsuits alleging that it made false financial statements in its prospectus..