Wed, Nov 23, 2016
Suit Filed On Behalf Of Shareholders Who Claim Violations Of The Exchange Act
While GoPro may be able to mollify people who purchased a Karma Drone with a full refund and a Hero5 Black camera, some investors may not be as easy to placate in light of the recall.
Dronelife reports that a class-action lawsuit has been filed against the company and some of its officers on behalf of shareholders who purchased stock in the company between September 19 and November 4 of this year.
The suit claims GoPro violated federal securities laws under the Securities Exchange Act of 1934 (the “Exchange Act”). It alleges that "throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (1) GoPro’s Karma drones likely to lose power midflight, and fall out of the sky; (2) GoPro had knowingly overstated the efficacy of the Karma drone and thus its customer demand for the new product; (3) once this issue was made public, it would require a pricey recall of Karma drones; and (4) consequently, GoPro’s public statements were materially false and misleading at all relevant times.
On November 3, 2016, GoPro issued a press release and filed a Form 8-K Current Report with the SEC announcing GoPro’s financial and operating results for the quarter ended September 30, 2016 (the “Q3 2016 8-K”). The Q3 2016 8-K stated revenue guidance for 2016 in the range of $1.25 billion and $1.3 billion, a substantial loss from the projected revenue guidance of $1.35 billion and $1.5 billion that GoPro stated in its previous filing. However, this decrease in revenue was expected with the recall of its Karma drones. Following this news, GoPro stock dropped $0.90 per share, or 7.01%, to close at $11.94 on November 3, 2016, and dropped another $0.78 per share, or 6.53%, to close at $11.16 on November 4, 2016."
The suit has already been filed, and it open through January 17, 2917 to any investors of record during that period.
(Source: Law firm news release and cited publication. Image from file)
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