Twitter, Inc. (TWTR) Accused of Misleading Shareholders
According to the a class action complaint for alleged violations of the Securities Exchange Act of 1934, in August 2019, Twitter disclosed that it had identified issues in its user settings choices for target advertising but went on to assure investors that it had “fixed issues.” However, Twitter failed to disclose that the changes it implemented to fix these issues also adversely affected Twitter’s ability to target advertising, including through its Mobile App Promotion (“MAP”) product. As a result, Twitter experienced a material decline in advertising revenue. This decline in Twitter’s financials became public knowledge on October 24, 2019, when Twitter revealed overall revenue that was 5% lower than analysts’ expectations, citing weaker-than-expected advertising revenue as the cause. Following this disclosure, the Wall Street Journal published an article highlighting Twitter’s issues with its advertising software and the continued negative impact on ad sales expected by the Company moving forward. On this news, Twitter’s shares price fell $8.10 per share, or over 20%, to close at $30.73. The stock continues to decline.
