Twitter to pay $ 809.5 million to settle investor class action lawsuit

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Twitter has disclosed a binding agreement to settle a class action lawsuit, under which the social network will pay $ 809.5 million to resolve claims it provided misleading information about user engagement to investors.

The initial lawsuit, filed in 2016 by a Twitter shareholder suspected of Dorsey and others, including former CEO Dick Costolo and board member Evan Williams, hid facts about the slowing growth of companies. Twitter users as they sold their personal stocks “for hundreds of millions of dollars in insider profit.” The complaint alleged that the company was tracking Daily Active Users (DAUs) as a primary indicator of user engagement. Twitter in early 2015, but hadn’t revealed it to investors at the time (when it was reporting monthly active user numbers). According to the lawsuit, figures from Twitter’s DAU showed that growth in user engagement was either stable or declining.

Twitter, in a 8-K deposit Monday, noted that the final settlement agreement will not include or constitute an admission, concession or finding of fault, liability or wrongdoing on the part of the Company or a defendant. The deal still requires court approval; the consolidated case was heard by the United States District Court for the Northern District of California.

The company said it intends to use available cash to pay off the settlement amount, which is expected to be paid in the fourth quarter of 2021. Twitter expects to record a fee for the settlement in the third quarter of 2021.

As of June 30, 2021, Twitter had $ 4.13 billion in cash and cash equivalents as well as short-term investments worth $ 4.48 billion. The company beat Wall Street’s financial expectations for the second quarter with its strongest quarterly revenue growth since 2014. For the period, Twitter said it had an average of 206 million monetizable daily active users, up from 199 million in the first quarter and 11% year over year. , with international markets accounting for all of the growth, with US DSUs declining by $ 1 million sequentially.

The company presented the mDAU metric with its fourth quarter 2018 results, telling investors that it believes it best reflects its usage monetization goals. Twitter defines mDAU as the average number of “people, organizations or other accounts who have logged in or have been otherwise authenticated and accessed Twitter on a given day through twitter.com or Twitter applications capable of serving advertisements.”

The two main plaintiffs in the securities fraud class action against Twitter were the National Elevator Industry Pension Fund, represented by Robbins Geller Rudman & Dowd, and KBC Asset Management NV, represented by Motley Rice LLC.



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