On July 16, 2018, Northern District of California Judge Jon S. Tigar granted class certification to a group of investors who purchased shares of Twitter Inc. (“Twitter” or the “Company”) between February 6, 2015, and July 28, 2015 (the “Class Period”), in a case alleging that Twitter exaggerated its user engagement, resulting in an almost 15 percent drop in its stock shares in a single day.
In their March 2017 consolidated amended complaint, the investors accuse Twitter of emphasizing daily using engagement, but failing to share the metric of measurement during the Class Period. While neglecting to report its daily active uses, Twitter did publish general statements declaring increasing user engagement. However, according to the allegations of the consolidated amended complaint, Twitter’s statements were based on discontinued metrics and actual user engagement was, in fact, declining.
Twitter executives did not admit that user growth was “slowing quite dramatically” until a call with analysts and investors on July 28, 2015, after which the Company’s stock shares plummeted approximately 15 percent.
Judge Tigar appointed KBC Asset Management NV and The National Elevator Industry Pension Fund as lead plaintiffs to represent the investors, who alleged that Twitter’s misleading claims of positive user engagement artificially inflated the price they paid for stock shares.
The court rejected Twitter’s argument that there should only be one lead plaintiff, as all class members bought and held shares during the Class Period. According to Judge Tigar’s order, “the fact that one plaintiff might be the ‘most capable’ does not mean that another plaintiff is not also capable, and nothing in the [Private Securities Litigation Reform Act] appointment process sheds any light on that question.”
The legal team at Shepherd, Finkelman, Miller & Shah, LLP (“SFMS”) has significant experience litigating class action and securities matters. If you have any questions regarding this subject or this posting, please contact Nick Lussier or Chiharu Sekino. We can also be reached toll-free at (866) 540-5505.
SFMS is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, and Pennsylvania. SFMS is an active member of Integrated Advisory Group (www.iaginternational.org), which provides us with the ability to provide our clients with access to excellent legal and accounting resources throughout the globe. For more information about our firm, please visit us at www.sfmslaw.com.
Graf, Rachel. “Investors Get Cert. In Twitter Stock-Drop Suit.” Law 360. Last modified on July 17, 2018.