According to the Plaintiff's law firm's press release announcing the filing of the lawsuit, the Complaint alleges that on August 6, 2019, Twitter publicly disclosed through a tweet that it recently found issues where certain user settings choices designed to target advertising were not working as intended. However, unknown to investors, while Twitter represented that it "fixed" certain issues relating to user choice settings, Defendants failed to disclose that the changes implemented to fix these issues adversely affected Twitter's ability to target advertising, including the targeting of advertising through its Mobile App Promotion ("MAP") product, which caused a material decline in advertising revenue.
On October 24, 2019, before the market opened, the Company disclosed its financial results for the quarter ended September 30, 2019 and conducted a conference call with investors. During the conference call, Twitter's CEO disclosed that Twitter "had some missteps and bugs in our map ads . . . We discovered and took steps to remediate bugs that largely affected our legacy map product. These bugs affected our ability to target ads and share data with measurement and partners. We also discovered that certain personalization and data sightings were not operating as expected." On this news, Twitter's shares declined from a closing price of $38.83 per share on October 23, 2019, to close at $30.73 per share, a decline of $8.10 per share, or over 20%, on heavier than average trading volume.
The Complaint alleges that throughout the Class Period, Defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the SEC.