Waitr Holdings Inc. (WTRH) Accused of Misleading Shareholders
According to the class action complaint for alleged violations of the Securities Exchange Act of 1933 and 1934, Waitr’s officers touted the company’s ability to provide services to restaurant customers at a low take rate and its efficient labor model. Contrary to Waitr’s representations, Waitr could not afford to maintain its competitive 15% take rate, and in reality, only initially sustained this rate by engaging in illegal and improper activities that inflated revenue and created the illusion of financial stability. Following its May 2019 secondary offering, Waitr implemented a draconian price increase and finally revealed its adverse financial situation, inciting calls for boycotts from its customers. Then, on August 8, 2019, Waitr reported massive losses, terrible operating performance, huge cost increases, diminishing prospects, and accelerating losses for second quarter 2019 and announced the termination of its CEO. On this news, Waitr’s stock price fell 50% to close at $1.31, an almost 90% decline from its class period high of $15.00.
