(Yicai Global) July 17 -- Qutoutiao’s stock price plunged after China’s main state broadcaster slammed the popular news aggregator for advertising problems, including deceptive claims and gambling links, in the television network’sinfluentialannual consumer rights show.

CCTV 315 Gala, which aired yesterday evening, criticized Qutoutiao for laxity in allowing unqualified institutions to push medical ads that exaggerate treatment effects. Links in some adverts also direct users to illegal online gambling platforms, the show claimed.

Qutoutiao’s shares [NASDAQ:QTT] fell 23 percent in New York to close at USD2.84, giving the Shanghai-based company a market cap of USD847 million. In pre-market trading today, the stock was up 8.1 percent at USD3.07 as of 5.36 p.m. in China.

Advertising agency platforms are at fault for the problems cited in the show, Qutoutiao said in response to Yicai Global. It will carry out a comprehensive inspection and rectification of these agencies and has suspended from duty the head of advertising operations.

Major android app stores in China quickly removed Qutoutiao following CCTV 315 Gala, which normally goes out on March 15, World Consumer Rights Day, but was delayed this year due to the coronavirus outbreak in the country. The app is still available for download on Apple's App Store.

Qutoutiao is looking into the removal of its android app, it told Yicai Global, adding that users who have installed it may continue to use it as normal.

Developed by Shanghai Jifen Culture Communications and launched in 2016, Qutoutiao is a key rival of Toutiao, which belongs to TikTok owner ByteDance Technology. Its income mainly comes from advertising. Its first-quarter operating revenue rose 26.2 percent to CNY1.4 billion (USD201.3 million) from a year earlier, of which CNY1.36 billion -- more than 96 percent of the total -- derived from advertising, according to the earnings report it published last month.

This is not the first time Qutoutiao's ad business has come under fire. Shanghai regulators called it in for a hot-seat session last year to demand the company strengthen pre-release ad reviews to eliminate fake and illegal ones on its platform.

Qutoutiao, which has shot its wad on marketing, has long run in the red. Its losses totaled CNY4.1 billion over the six quarters since it went public in September 2018, though its first-quarter loss this year narrowed 23 percent to CNY352 million (USD50.3 million). Founder Eric Tan hopes the firm can break even in the second half, he said in a conference call withWall Street analysts.

Editor: Ben Armour