K12 Inc. (LRN) Misled Shareholders About its Ability to Support Online Learning During the Pandemic
Following the nationwide closure of schools due to COVID 19, K12 and its officers and directors disseminated false and misleading statements touting the viability of the Company’s online platforms, cybersecurity protocols, preparedness for large volumes of students, and its ability to support and train students, parents, and teachers. Based on these misstatements, the price of K12 shares rose to an all-time high of $51.60 on August 5, 2020. In reality, however, K12 was did not have the technological capabilities to support and service the massive increase in traffic on its website and learning platforms. When news of K12’s deficiencies were revealed, the price of its stock began to decline. The stock fell 7% on August 27, 2020, when Miami-Dade County teachers reported K12’s training was ineffective and “unacceptable.” On September 3, after Miami-Dade County experienced significant technical difficulties and revealed that the superintendent never signed the $15.3 billion contract with K12, the stock fell over 10.5%. The stock fell another 11.5% on September 10, after the Miami-Dade County Public School Board voted to terminate its K12 contract. Finally, Beaufort County School District also terminated its contact with K12, causing the stock to decline nearly 5% on September 18, 2020.
