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A Pinterest investor has filed a nationwide class action against the company he says made “unrealistically positive” statements about its business, only for its shares to take a nose-dive on April 28.
In a class action lawsuit filed Thursday in California federal court, Plaintiff Edward LeMoure alleges Pinterest, its CEO and CFO violated the Securities Exchange Act in its communications earlier this year.
LeMoure said Pinterest announced its fourth quarter and full year financial results Feb. 4, 2021 and showed revenue growth and growth in monthly active users. At the time, Pinterest CEO Ben Silbermann, a defendant in the class action, made positive and optimistic statements about the results to investors and the press, the class action states.
Silbermann later that day made statements saying Pinterest “could see” some of its gains reverse if pandemic restrictions ease.
However, the class action says Silbermann’s statements that day didn’t give the full picture, and thus “were materially false and/or misleading, and failed to disclose material adverse facts about the Company’s business, operations, and prospects.”
Silbermann did not tell investors that user growth was already slowing and that Pinterest expected it to slow more, the class action alleges.
On April 27, Pinterest announced its first quarter 2021 financial results. The class action says it reported that global monthly active users grew “only 30% year-over-year to 478 million, a decline from the prior quarter’s 37% year-over-year growth.”
On this news, Pinterest’s share price nose-dived $11.25, or 14.5 percent, to close at $66.33 per share, the class action states.
LeMoure says investors were harmed, as they bought Pinterest securities relying on the integrity of the stock price, which he says was inflated.
“As a result of these materially false and/or misleading statements, and/or failures to disclose, Pinterest’s securities traded at artificially inflated prices during the Class Period.”
LeMoure is looking to represent anyone who bought Pinterest securities between Feb. 4 and April 27 this year.
He is seeking certification of the Class, damages, costs expenses and a jury trial.
Meanwhile, class action lawsuits brought under the Securities Exchange Act can sometimes end in large settlements. In 2012, Citigroup, Inc. reached a $590 million settlement with shareholders to resolve allegations it committed securities fraud.
Also in 2012, a securities lawsuit against Goldman Sachs Group, Inc., Bank of America, and several other large firms resulted in an $18.5 million settlement.
What do you think about this class action on behalf of Pinterest stockholders? Let us know in the comments!
The plaintiff is represented by Robert V. Prongay, Charles H. Linehan and Pavithra Rajesh of Glancy Prongay & Murray LLP.
The Pinterest Exchange Act Class Action Lawsuit is LeMoure et al., v. Pinterest et al., Case No. 3:21-cv-03181, in the U.S. District Court Northern District of California
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I co-creator to pinterest.com my page is pinterest.com/p/business/create