Lisa was sued by US stock investors and laid off 18% of her employees. Ideal's recent situation is not so "ideal".

Do you remember the Ideal MEGA incident some time ago?

The controversy caused by this car has impacted Ideal Auto's sales, market value and reputation. It can be said to be the biggest crisis Ideal Auto has faced in the past three years.

However, the crisis does not seem to be over yet.

Yesterday, Ideal Auto was sued by investors for securities fraud. The so-called "fraud" was related to Ideal MEGA. ideal Another 18% layoffs were announced.

It never rains but it pours. Today, let’s not talk about layoffs, but securities fraud. This is very common in the US capital market and is also often heard in the Chinese market. Why was Ideal Auto targeted this time?

According to the information currently known, Ideal was sued because it exaggerated the market demand for the car when launching the Ideal MEGA, and also overestimated the effectiveness of its own operating strategy. Under such circumstances, Ideal is unlikely to achieve its delivery expectations for the first quarter of 2024.

If Ideal Auto disclosed this information at the time, it would have had a significant negative impact on the company's financial situation, and thus affected the company's performance in the capital market. Investors believe that Ideal Auto has made false and misleading statements, and therefore hope that the court will order Ideal Auto to compensate investors for the losses caused by its illegal behavior and the decline in its stock price.

Ideal MEGA was officially listed on March 1. On the previous trading day, Ideal's US stocks closed at US$45.88. On the day Ideal MEGA was listed, Ideal's stock price began to plummet, and then continued to decline for more than two months. It has now fallen to around US$25. In more than two months, the market value has fallen by nearly half.

The current total market value of Ideal Auto is US$27.2 billion. If it loses this lawsuit, Ideal Auto will suffer significant losses.

Class action lawsuits are not common in all industries in China, and are relatively unfamiliar to domestic consumers and investors. However, they are quite common in the mature U.S. capital market, so Ideal Auto should not take it lightly.

On March 16, 2024, Apple Inc. reached a settlement agreement worth $490 million with investors for a reason very similar to that of Ideal Auto: Apple CEO Cook exaggerated the demand for Apple phones in the Chinese market in 2018 and misled investors. The problems encountered by Ideal Auto this time are exactly the same as those in Apple's class action lawsuit.

Class action lawsuits may be different from what many people understand. They generally adopt the principle of "implied joining and explicit withdrawal". In simple terms, as long as you do not declare to give up, it is assumed that you agree to initiate the lawsuit. Under this rule, a limited number of people can create a large-scale lawsuit.

So, will Ideal Auto really lose the case this time? I'm afraid the matter is not that simple, because the person who initiates the lawsuit is not necessarily right.

If we review the timeline of Ideal MEGA since its listing, we will find that the timing of Ideal MEGA's listing and the timing of the stock price decline are too coincidental. The stock price plummeted on the day the new car was launched. In fact, the controversy about Ideal MEGA arose some time after its listing.

It is undeniable that Ideal Auto did come out to explain on March 22, nearly a month after Ideal MEGA went public. In a public statement, Ideal Auto admitted that it had mistakenly operated Ideal MEGA from 0 to 1 (commercial verification period) as from 1 to 10 (rapid development period).

At the same time, Ideal Auto also admitted that it was too focused on sales and competition and ignored user value. In addition, Ideal Auto also lowered its full-year sales target from 650,000 to 800,000 units to 560,000 to 640,000 units; as for the sales forecast of Ideal MEGA, it was significantly reduced to 2,000 units per month.

The key issue is whether Ideal’s statement was a deliberate concealment or “honesty after the fact”. The court’s investigation into this issue will directly determine the outcome of the verdict.

From an objective perspective, cars are consumer products. No company can accurately grasp their sales after they are launched on the market, and it is unlikely to accurately grasp their market demand.

In the automobile market, it is normal for a car to perform higher or lower than expectations. Many manufacturers have added production capacity after listing because they underestimated market demand. Therefore, it is difficult to conclude whether Ideal Auto is deliberately concealing the truth.

In fact, even when Apple settled the case in March, Cook did not admit that he had committed fraud. He chose to settle only to avoid litigation costs and distract his attention. It remains to be seen what Li Auto will choose next.

The US capital market is quite dangerous, and the various accountability systems are more complete than those in China's capital market. At the same time, there are also a large number of short-selling institutions in the US capital market, which will seize on any mistakes made by listed companies to make a fuss.

Under such circumstances, it is basically impossible for listed companies with problems to remain unscathed. Ideal Auto is one of the earliest Chinese new car-making forces to enter the US capital market, and is currently the only new car-making force that has achieved profitability. It has firmly established itself as the top new car-making force in China, but it must also face the risks of US capital.

Regardless of the outcome of this class action lawsuit, it will serve as a reminder to Ideal Auto that it must not make any mistakes. Due to the immaturity of China's capital market and new energy vehicle market, many practices in China will not cause any major problems, but in the US market, a small problem may destroy the entire company.

For Ideal Auto, since it has chosen to be listed on the US stock market, it must withstand all kinds of controversies and tests. Taking a step back, even if Ideal Auto really fails, it should be in the "battlefield" of new energy vehicles, not in the capital market.

It is difficult to predict the outcome of Ideal Auto's class action lawsuit, but one thing is certain: if there are no problems, there will be no trouble. Ideal Auto still has a long way to go in dealing with the US capital market.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.