SoylentNews is people
SoylentNews
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: 0) by Anonymous Coward on Tuesday October 11 2016, @06:21PM
You didn't make me rich - it's your fault I'm not rich! I'm just a stupid investor who thinks that companies can always lose money, year after year, and yet still be profitable. Numbers, I don't understand numbers.
Now pay me.
/sarc
There are two possibilities:
1) We thought the company would earn $X, due to Y reasons. We publically claim this. This didn't happen, and the company instead lost money. This is sad, but it is the nature of business.
2) We thought the company would lose money. We publically claim that the company will actually earn $X, due to Y reasons. We do this for our own purposes (e.g. personal pride, so we individually profit by selling stock options, or whatever). This is fraud and numerous other very bad and illegal things (including insider trading, potentially).
If it is #1, then you are right. Past performance is no guarantee of future returns, stock prices can go up as well as down, your mileage may vary, consult with a medical professional before beginning a exercise routine.
If it is #2, then they should have the proverbial book thrown at them.
As for which it is, I guess that's the point of the lawsuit.
(Score: 2) by PartTimeZombie on Tuesday October 11 2016, @08:40PM
If it is #2, then they should have the proverbial book thrown at them.
Quite right, they should, but good luck proving it.