NEW YORK, NY / ACCESSWIRE / October 14, 2016 / Pomerantz LLP announces that a class action lawsuit has been filed against Twitter, Inc. (“Twitter” or the “Company”) (NYSE: TWTR) and certain of its officers. The class action, filed in United States District Court, Northern District of California, and docketed under 16-cv-05439, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired Twitter securities between February 6, 2015 and July 28, 2015 both dates inclusive (the “Class Period”). This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws under the Securities Exchange Act of 1934 (the “Exchange Act”).
If you are a shareholder who purchased Twitter securities during the Class Period, you have until November 15, 2016 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at firstname.lastname@example.org or 888.476.6529 (or 888.4-POMLAW), toll free, ext. 9980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and number of shares purchased.
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Twitter is a global platform for public self-expression and conversation in real time, where any user can create a Tweet and any user can follow other users. The Company’s main source of revenue is advertising. Because advertising revenue is driven by the total number of users on the platform and, equally as important, the level of engagement of such users, the Company and analysts have focused closely on metrics measuring total users and user engagement. Twitter reported two primary user metrics: Monthly Active Users or “MAUs” (a measure of the total user base) and timeline views (a measure of user engagement).
The Complaint alleges that throughout the Class Period, Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Defendants concealed adverse facts they knew or deliberately disregarded, including that by early 2015, (ii) daily active users (“DAUs”) had replaced the timeline views metric as the primary user engagement metric tracked internally by Twitter management and that the trend in user engagement growth (i.e., DAUs) was flat or declining. In addition, (iii) defendants concealed that new product initiatives were not having a meaningful impact on MAUs or user engagement, (iv) that Twitter’s stated “acceleration [in MAU growth]” was the result of low-quality MAU growth, and that defendants lacked a basis for their previously issued projections of approximately 20% MAU growth and 550 million MAUs in the immediate term, (v) as a result of the foregoing, Twitter’s public statements were materially false and misleading at all relevant times.
On February 5, 2015, after the market closed, Twitter released its fourth quarter and fiscal year 2014 financial results. The Company blamed lower than expected MAU growth on “quarter-specific factors . . . which include seasonality and a couple of issues related to the launch of iOS 8.” Furthermore, the Company reiterated its outlook for strong MAU growth going forward and emphasized the success of the new product initiatives designed to “drive [MAU] growth.” Defendants also reiterated that Twitter would discontinue reporting its primary user engagement metric, timeline views.
On April 28, 2015, Twitter released its first quarter 2015 financial results. The Company reported non-GAAP income of $47 million, or $0.07 non-GAAP EPS, and revenue of $436 million for the first quarter ended March 31, 2015. Additionally, the Company provided its outlook for the second quarter of 2015, projecting second quarter revenue of $470 million to $485 million. Twitter also lowered its full year 2015 revenue forecast to between $2.17 billion and $2.27 billion from prior guidance of $2.30 billion to $2.35 billion. Furthermore, the Company reported that Twitter’s MAUs only increased 5% over the prior quarter.
As a result of this news, the price of Twitter stock dropped $9.39 per share to close at $42.27 per share on April 28, 2015, a decline of 18% on volume of over 77 million shares. On the following day, April 29, 2015, the price of Twitter stock dropped again, falling $3.78 per share to close at $38.49 per share, a one-day decline of nearly 9% on volume of over 120 million shares. However, the stock continued to trade at artificially inflated levels as Defendants assured investors that new initiatives to drive user growth and engagement were still in the early stages.
Then, on July 28, 2015, after the market closed, Twitter issued a press release announcing its second quarter 2015 financial results. The Company reported non-GAAP income of $49 million, or $0.07 non-GAAP EPS, and revenue of $502 million for the second quarter ended June 30, 2015. Additionally, the Company provided its outlook for the third quarter of 2015, projecting third quarter revenue of $545 million to $560 million. Twitter also provided its outlook for the 2015 full year, projecting revenue in the range of $2.20 billion to $2.27 billion.
As a result of this news, the price of Twitter stock plummeted $5.30 per share to close at $31.24 per share on July 29, 2015, a one-day decline of nearly 15% on volume of nearly 93 million shares.
The Pomerantz Firm, with offices in New York, Chicago, Florida, and Los Angeles, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com.
SOURCE: Pomerantz LLP