According to the law firm press release, Constant Contact originated as an email marketing platform for small and midsize organizations. The Company has progressed to provide a suite of online marketing tools that are designed for small organizations, including small businesses, associations and non-profits.
The complaint alleges that the Company and its executives violated the federal securities laws by issuing misleading statements during the Class Period regarding Constant Contact’s business operations and financial performance. Specifically, defendants made false and/or misleading statements and/or failed to disclose: (1) that the Company’s gross customer additions were lower than expected; (2) that the Company was experiencing negative trends in customer conversion rates; (3) that the Company was steering new customers towards the lowest-priced packages; (4) that, as a result, the Company’s revenues for 2015 would be below expectations; and (5) that, as a result of the foregoing, Defendants’ statements about Constant Contact’s business operations and prospects were false and misleading and/or lacked a reasonable basis.
On July 23, 2015, after the market closed, the Company disclosed earnings results for the second quarter of 2015 with a weak third quarter outlook. Constant Contact experienced low trial-to-conversion rates in April and May of 2014 and a significant swing in product mix with approximately 80% of new customers choosing the lowest-priced Email package instead of higher-priced offerings. On this news, shares of Constant Contact declined $3.35 per share, over 11%, to close on July 24, 2015, at $26.18 per share, on unusually heavy volume.
On September 21, 2016, the Court issued an Order appointing Lead Plaintiff and Counsel. Lead Plaintiff filed an amended complaint on December 19.