Saturday, October 23, 2021

Twitter reaches $800 million settlement in shareholder lawsuit

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Twitter, the social media platform, reached a settlement in a high-profile shareholder class action lawsuit — the largest ever involving an initial public offering. Twitter will pay $809.5 million over three years to pay off more than a million plaintiffs’ claims, according to court filings on Tuesday. The shares will be distributed on an agreed-upon schedule.

The settlement follows Twitter’s $2.8 billion initial public offering in November 2013. The money will go towards the relief of damages plaintiffs have collected from other Twitter defendants. The shareholder class action was consolidated in early 2014, and brought cases from investors who purchased Twitter’s common stock between November 28, 2012 and November 27, 2013. Plaintiffs argued that Twitter was overvalued in its offering and that there was evidence that Twitter had not properly prepared for the offering, which is called Rule 506(b)(1). This suit had filed in New York, although cases would ultimately proceed in both New York and California. The jury trial was scheduled to begin in June.

Twitter will use this settlement to wipe out those claims against the company, which has been plagued with sluggish growth since its IPO.

In a statement, Twitter and the plaintiffs’ attorneys said the settlement reached “will avoid a lengthy trial and provide long-term certainty to shareholders,” and that they “look forward to [Twitter’s] speedy and efficient settlement.”

Twitter continues to struggle with stagnant user growth, even as it reports improved financial results from its direct-response advertising model. The settlement was announced the same day as an announcement of a 40 percent increase in quarterly revenue and a 66 percent increase in profits. The earnings report was boosted in part by a 58 percent increase in video advertising revenue.

On its IPO day, shares hit an all-time high of nearly $45 before falling. They are now trading at around $30.

Read the full story at The Guardian.

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