Robbins Geller Rudman & Dowd LLP Files Class Action Suit Against ContextLogic Inc.
The ContextLogic class action lawsuit was filed in the Northern District of California and is captioned Boehning v. ContextLogic Inc., No.
Robbins Geller Rudman & Dowd LLP (https://www.rgrdlaw.com/cases-contextlogic-inc-class-action-lawsuit.html) today announced that it filed a class action seeking to represent purchasers of ContextLogic Inc. (NASDAQ:WISH) common stock pursuant or traceable to the Registration Statement and Prospectus issued in connection with ContextLogic’s December 16, 2020 initial public stock offering (“IPO”) and purchasers during the period between December 16, 2020 and May 12, 2021 (the “Class Period”) (the “ContextLogic class action lawsuit”). The ContextLogic class action lawsuit was filed in the Northern District of California and is captioned Boehning v. ContextLogic Inc., No. 21-cv-03671.
The Private Securities Litigation Reform Act of 1995 permits any investor who purchased ContextLogic common stock pursuant or traceable to the Registration Statement and Prospectus issued in connection with ContextLogic’s IPO and ContextLogic common stock during the Class Period to seek appointment as lead plaintiff in the ContextLogic class action lawsuit. A lead plaintiff is generally the movant with the greatest financial interest in the relief sought by the putative class who is also typical and adequate of the putative class. A lead plaintiff acts on behalf of all other class members in directing the ContextLogic class action lawsuit. The lead plaintiff can select a law firm of its choice to litigate the ContextLogic class action lawsuit. An investor’s ability to share in any potential future recovery of the ContextLogic class action lawsuit is not dependent upon serving as lead plaintiff. If you wish to serve as lead plaintiff in the ContextLogic class action lawsuit, you must move the Court no later than 60 days from today. If you wish to serve as lead plaintiff of the ContextLogic class action lawsuit or have questions concerning your rights regarding the ContextLogic class action lawsuit, please visit our website by clicking here or contact Mary K. Blasy of Robbins Geller, at 800/449-4900 or 631-454-7719 or via e-mail at [email protected]. You can view a copy of the complaint as filed at https://www.rgrdlaw.com/cases-contextlogic-inc-class-action-lawsuit.html.
The ContextLogic class action lawsuit charges ContextLogic and certain of its executives with violations of the Securities Exchange Act of 1934 and/or violations of the Securities Act of 1933. ContextLogic is a San Francisco-based, global mobile e-commerce company that operates the Wish platform that connects its value-conscious user base to merchants.
The ContextLogic class action lawsuit alleges that in the Registration Statement and Prospectus used to conduct the IPO and throughout the Class Period, defendants made materially false and misleading statements about the strength of ContextLogic’s business operations and financial prospects by overstating its then-present monthly active users (“MAUs”) and MAU growth trends.
On December 16, 2020, ContextLogic completed its IPO in which it issued and sold 46 million shares of its Class A common stock at $24 per share, raising more than $1.1 billion in proceeds. In the IPO Registration Statement, ContextLogic claimed to have had 108 million MAUs as of September 30, 2020, the end of the last interim quarter prior to its IPO. ContextLogic stated there that it “define[d] MAUs as the number of unique users that visited the Wish platform, either on [its] mobile app, mobile web, or on a desktop, during the month,” emphasizing the materiality of the metric to investors by stating: “We view the number of MAUs as key driver of revenue growth as well as a key indicator of user engagement and awareness of our brand.”
Yet when ContextLogic reported its fourth quarter and fiscal year 2020 financial results for the period ended December 31, 2020 on March 8, 2021, ContextLogic disclosed that in reality, by the time of its December 2020 IPO, ContextLogic’s MAUs had already “declined 10% YoY during Q4 to 104 million, primarily in some emerging markets outside of Europe and North America where Wish temporarily de-emphasized advertising and customer acquisition as the company worked through logistics challenges it faced earlier in the year.”
On this news, the market price of ContextLogic common stock declined on March 8, closing down more than 10% at $15.94 per share on unusually high trading volume of more than 10 million shares trading. Yet the market price of ContextLogic common stock remained artificially inflated based on ContextLogic’s statements that day about its continued strong demand and its providing first quarter 2021 (“1Q21”) sales guidance of $735 to $750 million, representing year-over-year growth of 67% to 70%.
Then on May 12, 2020, when ContextLogic announced 1Q21 financial results for the interim period ended March 31, 2021, ContextLogic disclosed that its MAUs had declined another 7% to just 101 million. ContextLogic’s forward sales guidance also fell short, with its second quarter 2021 revenue guidance of just $715 million to $730 million coming in significantly less than the $759 million the market had been led to expect and far less than the guidance of $735 to $750 million provided for 1Q21.
On this news, the market price of ContextLogic common stock declined $3.36 per share, or 29%, to close at $8.11 per share on May 13, 2021, on even more unusually high trading volume of more than 42 million shares trading, or more than 7 times the average daily volume over the preceding 10 trading days.
The plaintiff is represented by Robbins Geller, which has extensive experience in prosecuting investor class actions including actions involving financial fraud.
Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities litigation. With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history. ISS Securities Class Action Services has ranked Robbins Geller as one of the top law firms in the world in both amount recovered and total number of class action settlements for shareholders every year since 2010. The SCAS 2020 Top 50 Report ranked Robbins Geller first for recovering $1.6 billion for investors last year, more than double the amount recovered by any other plaintiffs’ firm. Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims. Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide. Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry. Please visit http://www.rgrdlaw.com for more information.
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