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from the past-performance-is-not-indiciative-of-future-gains dept.
Submitted via IRC for TheMightyBuzzard
Twitter shareholder Doris Shenwick has filed a lawsuit against the social media company. The suit claims that Twitter made misleading statements about its expected growth in order to artificially inflate the value of its stock. The suit is seeking approval for class-action status, which would allow anyone who purchased Twitter stock between February 6, 2015 and July 28, 2015 to join the lawsuit.
In November of 2014, the company stated that the number of monthly active users (MUA [sic]) was expected to grow to 500 million in the intermediate term and to over 1 billion in the long term. In February of 2015, a shareholder report for Q4 of 2014 showed lower growth than expected, which the company attributed to quarter specific factors. However, the report still had a high expectations for future growth and announced several new initiatives to increase its users and their engagement. As a result of this report, Twitter stock rose 17% within 24 hours.
However, in April and July of 2015, Twitter released two disappointment quarterly reports in a row, showing that user growth was basically flat, and expectations for future growth had been significantly lowered. As a result, Twitter stock plummeted.
However, the lawsuit doesn't consider Twitter to be merely mistaken or overoptimistic in its earlier predictions. Instead, the company is accused of making misleading statements to defraud investors. The suit claims that new products and initiatives mentioned in the February report were having no significant effect on user growth, and Twitter executives knew this when they made the report.
Source: https://techraptor.net/content/twitter-sued-by-shareholder-over-growth-predictions
(Score: 2, Interesting) by Anonymous Coward on Tuesday October 11 2016, @02:05PM
In my 30's and still don't understand why Twitter, Facebook, even Google have so much money tied up in them. Google I can understand somewhat - they have a bunch of employees and they have a good revenue stream from AdWords. But a market cap of 559 Billion USD? That just makes things worse when somebody else comes along and does Search better.
So back to Twitter. I've never seen Twitter as more than public text messaging. The only time I've used it is to search for outages, to see if a major tier fiber provider has gone down, or a large scale catastrophic event. I don't have an account and see no value in it. But obviously some people do, good for them, but to have a market cap of 11 Billion USD?? (as of today anyway). WHY???
I'm really happy Craigslist has stayed private, and simple. Make living with a useful product and don't let work or money go to your head.
Yes I'm aware the point of investing is... well, to invest and make a profit. You loan your money with risk to an entity that you expect will do more, turn a profit, pay dividends, and then you sell for any of a bunch of reasons. Who thought this stock market thing up anyway? "Hey Cletus. That business is making money. Let's put our money into it and then we'll have more money, everybody profits!"