According to the law firm press release, Twitter is a global platform for public self-expression and conversation in real time, where any user can create a Tweet and any user can follow other users. The Company's main source of revenue is advertising. Because advertising revenue is driven by the total number of users on the platform and, equally as important, the level of engagement of such users, the Company and analysts have focused closely on metrics measuring total users and user engagement. Twitter reported two primary user metrics: Monthly Active Users or "MAUs" (a measure of the total user base) and timeline views (a measure of user engagement). Prior to the beginning of the Class Period, Twitter announced that it would discontinue reporting its primary user engagement metric, timeline views, stating the reason for the change was that the metric was an unrepresentative measure of user engagement and no longer reflective of Twitter's business.
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements and/or omitted adverse information about the Company's business and prospects. Specifically, the complaint alleges defendants concealed adverse facts they knew or deliberately disregarded, including that by early 2015, daily active users ("DAUs") had replaced the timeline views metric as the primary user engagement metric tracked internally by Twitter management and that the trend in user engagement growth (i.e., DAUs) was flat or declining. In addition, defendants concealed that new product initiatives were not having a meaningful impact on MAUs or user engagement, that Twitter's stated "acceleration [in MAU growth]" was the result of low-quality MAU growth, and that defendants lacked a basis for their previously issued projections of approximately 20% MAU growth and 550 million MAUs in the immediate term. As a result of defendants' false statements and/or omissions, Twitter stock traded at artificially inflated prices during the Class Period, reaching a high of $52.87 per share.
On April 28, 2015, Twitter released its first quarter 2015 financial results and lowered its full year 2015 revenue forecast. In addition, the Company reported that Twitter's MAUs only increased 5% over the prior quarter. As a result of this news, the price of Twitter stock fell $9.39 per share, or 18%, to close at $42.27 per share on April 28, 2015, and continued its decline the following day, falling another $3.78 per share, or nearly 9%, to close at $38.49 per share on volume of over 120 million shares.
Then, on July 28, 2015, after the market closed, Twitter announced its second quarter 2015 financial results and reported that Twitter's MAUs had increased by only 2 million users over the prior quarter, representing growth of less than 1%. As a result of this news, the price of Twitter stock declined $5.30 per share, or nearly 15%, to close at $31.24 per share on July 29, 2015 on volume of nearly 93 million shares.
On October 16, 2017, the Court issued an Order granting in part and denying in part Defendants' motion to dismiss.