Twitter to pay $800 million to settle suit claiming it misled investors
Twitter will pay $809.5 million to settle a class-action lawsuit alleging the social media company misled investors, the company announced Monday.
As part of the settlement deal, Twitter and individually named defendants, including CEO Jack Dorsey and former CEO Richard Costolo, will continue to deny any wrongdoing or any other improper actions.
The complaint points to a November 2014 “pep rally with analysts” Twitter held to “buoy investor confidence.” The complaint alleges Twitter provided “unrealistic growth projections” at the event to calm investors’ skepticism.
The lawsuit alleges Twitter embarked in a “shell game” to “conceal the true state of the key metrics,” such as user engagement, when sharing analytics with investors.
The alleged shell game came to an “abrupt end” after Costolo left the company in 2015, according to the complaint.
Twitter intends to use cash on hand to pay the $809.5 million settlement. It is expected to be paid at the end of 2021, the company said in a regulatory filing.
As of June 30, Twitter had $4.13 billion in cash and about $4.5 billion in short-term investment assets, according to the company’s quarterly earnings report.
Twitter reported total revenue of $1.18 billion during the second quarter of the year, up 74 percent from the year before, and reported reaching 2016 million daily average users, up 11 percent from the year before, according to the report.