EZGO Technologies Ltd.: 1 for 40 Reverse Stock Split

Have you suffered losses investing in EZGO Technologies Ltd. at the recommendation of your financial advisor? If so, the securities attorneys at The White Law Group may be able to help you by filing a FINRA lawsuit against your brokerage firm.

What is EZGO Technologies?

EZGO Technologies Ltd. (NASDAQ: EZGO), through its subsidiaries, designs, manufactures, rents, and sells e-bicycles and e-tricycles in the People’s Republic of China. It operates in three segments: Battery Cells and Packs; E-Bicycles Sales; and Electronic Control System and Intelligent Robots. It offers its e-bicycles and e-tricycles under the Cenbird and EZGO brands; and smart charging piles, intelligent robots, and electronic control systems under the Hengdian brand name.

The company was formerly known as EZGO IOT Tech & Services Co., Ltd. EZGO Technologies Ltd. was founded in 2014 and is headquartered in Changzhou, China.

In September 2023, EZGO Technologies Ltd. offered shares of its common stock for sale to investors.  The offering was reportedly underwritten by Aegis Capital Corp. As of February 28, 2024, the average post offering return was –92.0%. The company’s common stock was traded on the NASDAQ, under the symbol “EZGO.”

Reverse Stock Split: 1 for 40

As of April 10, 2024, according to a PR Newswire press release,

EZGO Technologies Ltd. announced that on March 22, 2024, its board of directors approved a reverse split of its ordinary shares on a one-for-forty basis. The Company’s ordinary shares will begin trading on a post-split basis on April 12, 2024.

The Reverse Share Split was reportedly intended to increase the market price per share of the Company’s ordinary shares to allow the Company to maintain its Nasdaq listing.

As of August 14, 2024, according to Market Watch, shares of EZGO Technologies, Ltd., Inc. were down -98.99% over the last 12 months.

This significant 1-for-40 reverse stock split may indicate underlying risks or instability, which could raise concerns among investors.

Risks Associated with Small Stock Offerings 

There are numerous risks involved in investing in small stock offerings, including the following, among others:

Liquidity Concerns: These stocks may have low trading volumes, making it difficult to buy or sell shares at desired prices.
Lack of Information: Many small companies may not provide comprehensive financial disclosures or have limited operating histories.
Market Volatility: Small stocks can be more volatile than larger, established companies, leading to significant price fluctuations.

EZGO Technologies: Suitable Investment for you?

Broker due diligence is a process undertaken by brokerage firms to ensure they are recommending and selling investment products appropriate for their clients. This process protects the interests of the brokerage firm and its clients by ensuring that the investments offered are suitable for the client’s investment objectives, risk tolerance, and financial situation.

If a broker or brokerage firm makes an unsuitable investment recommendation or fails to disclose the associated risks adequately, they may be found liable for investment losses in a FINRA arbitration claim. Fortunately, FINRA provides an arbitration forum for investors to resolve such disputes.

Class Action vs. Individual FINRA Arbitration Lawsuit

You may wonder whether a large class action lawsuit is a better litigation option than an individual FINRA arbitration case.  The answer depends on many factors, but typically if the loss sustained is large (say larger than $100,000), an individual arbitration claim is likely a better option.  Class actions as a recovery option are more appropriate for grouping large numbers of individuals who have small claims – too small to generally pursue individually.

Free Consultation with Securities Attorneys

If you have suffered investment losses in EZGO Technologies Ltd., you may have recovery options. Please call the securities attorneys at The White Law Group for a free consultation at 1-888-637-5510.

About The White Law Group 

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington. The firm represents investors across the country in claims against their brokerage firms.