Green Dot Corporation (GDOT) Accused of Misleading Shareholders
According to the complaint for alleged violations of the Securities Exchange Act of 1934 between May 9, 2018 and November 7, 2019, in May 2017, Green Dot Corporation (GDOT) touted the success of its new business strategies, highlighting its new emphasis on direct deposit customers, which were customers that typically had a higher lifetime value, justifying the switch by stating “attracting and retaining the right kinds of customers is actually more important than the number of active customers.” Green Dot continued to affirm the success of its business strategies until the Company revealed in its first fiscal quarter 2019 conference call that it was experiencing a decline in its legacy product line and non-direct deposit accounts, acknowledging the attraction of high-value long-term customers was sometimes at the expense of “one and done customers.” As a result, on June 30, 2019, Green Dot revealed that its account services segment “underperformed expectations… in the first half in general due to a decline in non[-]direct deposit active accounts…resulting in lower than anticipated prepaid unit sales.” By the end of the relevant period, the stock had declined to $27.42 per share, representing a staggering 63% decline from its closing price of $74.67 on February 20, 2019. The stock has yet to recover.
