What a long, strange trip it’s been for Twitter shareholders since the company’s November 7, 2013 Initial Public Offering on the New York Stock Exchange.
Aside from the current litigation dominating today’s headlines between Twitter and Elon Musk – which includes a handful of shareholder class actions – investors from early 2015, have potential eligibility in a previously announced settlement, depending upon the timing of their purchases.
Recently, a final fairness hearing was scheduled for November 17, 2022, where Judge Jon S. Tiger in the Northern District of California is expected to officially approve the $809.5 million settlement. If, as expected, The Honorable Jon Tiger signs off on the negotiated terms of the settlement – those investors damaged from the alleged fraud will be one step closer to recovering a portion of their lost assets. To coincide with this next step in the legal process, a claim deadline of November 23, 2022, was established.
The significantly large $809.5 million settlement is based upon a few key factors… the level of alleged fraud by Twitter and its executives in early 2015 that coincided with the significant stock drop that ensued in April 2015 and July 2015.
- On February 5, 2015 – the day prior to the start of the Class Period – Twitter reiterated its outlook for strong growth going forward and emphasized the success of its new product initiatives
- Following these positive statements, Twitter’s stock price increased nearly 17% to close at $48.01 per share
- On April 28, 2015 – Twitter reported Q1 / 2015 results and lowered its full year 2015 guidance and noted its Monthly Active Users increased by only 5% over the prior quarter
- As a result of this news, Twitter’s stock price dropped $9.39 per share to close at $42.27 per share (a decline of 18%)
- On the following day, the price of Twitter’s stock dropped again, falling $3.78 per share to close at $38.49 (a further decline of nearly 9%)
- On July 28, 2015 – the final day of the Class Period – after the market closed, Twitter reported Q2 / 2015 results that disappointed Wall Street and again lowered its full year 2015 guidance
- As a result of this news, the following day the price of Twitter’s stock plummeted $5.30 per share to close at $31.24 per share, a one-day decline of nearly 15%
- In total, Twitter’s share price dropped almost 35% between February 6th and July 29th
- Defendants concealed adverse facts they knew or deliberately discarded, including that by early 2015, daily active users 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 was flat or declining.
- Defendants concealed that new product initiatives were not having a meaningful impact on Monthly Active Users (MAUs) or user engagement and that acceleration in MAU growth was the result of low-quality MAU growth (in which new users were not as engaged as existing users).
- Defendants lacked a basis for their previously issued projections of approximately 20% MAU growth and 550 million MAUs in the immediate term.
- As a result of defendant’s false statements and / or omissions, Twitter stock traded at significantly inflated prices during the Class Period, reaching a high of $52.87 per share.
The initial announcement of a tentative settlement occurred on September 20, 2021, minutes prior to jury selection in the scheduled securities class action trial. Settling defendants include the company and two former executives:
- Richard Costolo – Chief Executive Officer of Twitter from August 2009 to July 2015
- Anthony Noto – Chief Financial Officer of Twitter from July 2014 to August 2017
According to ISS Securities Class Action Services, this will become the 19th largest U.S. shareholder class action settlement of all-time, surpassing the 2010 settlement with HealthSouth Corp. valued at $804,500,000. Co-lead counsel Robbins Geller Rudman & Dowd LLP stated this Twitter settlement represents the largest securities fraud class action recovery opportunity in the last 20 years in the Ninth Circuit.
Top 20 U.S. Securities Class Action Settlements