Kacouris v. Facebook Inc. et al 1:18-cv-06765 – On July 27, 2018, investors sued Facebook, Inc. (Facebook, FB, or the Company) in United States District Court, Southern District of New York. Plaintiffs in the Facebook class action allege that they acquired Facebook stock at artificially inflated prices between April 25, 2018 and July 25, 2018 (the “Class Period”). They are now seeking compensation for financial losses incurred upon public revelation of the Company’s alleged misconduct during that time. For more information on the FB Lawsuit, please read below and contact us with any questions or concerns.

Summary of the Allegations

Company Background

The Company (NASDAQ: FB) was founded in 2004 and operates a social media platform that allows users to “stay connected with friends and family, to discover what’s going on in the world, and to share and express what matters to them.”

According to its corporate website, Facebook had 1.47 billion daily active users on Facebook on average for June 2018. It also had 2.23 billion monthly active users on Facebook as of June 30, 2018.

Facebook employed 30,275 people in 13 U.S. cities and 43 cities around the world by the end of June 2018.

Summary of Facts

Facebook and two of its senior officers (the “Individual Defendants”) are now accused of deceiving investors by lying and withholding critical information about the Company’s business practices and prospects during the Class Period.

Specifically, they are accused of omitting truthful information about revenue growth and a decrease in active users from SEC filings and related material. By knowingly or recklessly doing so, they allegedly caused Facebook stock to trade at artificially inflated prices during the time in question.

The truth came out when Facebook announced its financial and operating results for the second quarter of 2018 after the market closed on July 25, 2108. The Company then shared “revenues and numbers of daily and monthly active users that fell short of market expectations.”

During a conference call held to discuss the Company’s second quarter results that day, one of the Individual Defendants said Facebook “expected its revenue growth to slow and its operating margins to fall” due to detrimental currency conditions and “plan[s] to grow and promote certain engaging experiences like Stories that currently have lower levels of monetization.”

In articles published the next day (July 26, 2018) the mainstream media reported that the Company lost more than $119 billion in value “in one day,” and that the Company’s revelations, “alarmed” investors.

A closer look…

As alleged in the July 27 complaint, the Company repeatedly made false and misleading public statements during the Class Period.

For instance, on a form filed with the SEC on April 25, 2018, Facebook’s founder and CEO said in pertinent part: “Despite facing important challenges, our community and business are off to a strong start in 2018.”

On another form filed with the SEC on April 26, 2018, the Company reiterated much of the same information and included certifications pursuant to federal law that were signed by the Individual Defendants. These certifications stated, “the information contained in the [Q! 2018 10-Q] fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.”

Impact of the Alleged Fraud on Facebook’s Stock Price and Market Capitalization

The following chart illustrates the stock price during the class period:

Actions You May Take

If you have purchased shares during the Class Period, you may join the class action as a lead plaintiff, remain a passive class member, or opt out of this litigation and pursue individual claims that may not be available to the class as a whole.

NOTE: The deadline to file for lead plaintiff in this class action is September 25, 2018. You must file an application to be appointed lead plaintiff prior to this deadline in order to be considered by the Court. Typically, the plaintiff or plaintiffs with the largest losses are appointed lead plaintiff.

In order to identify your potential exposure to the alleged fraud during the time in question, you may wish to perform an analysis of your transactions in Facebook common stock using court approved loss calculation methods.

Recently Filed Cases

Listed below are recently filed securities class action cases being monitored by us, along with the class period and the deadline to file a motion to be appointed as the Lead Plaintiff in the action.  Please contact us if you would like an LK report for any of these cases:

About Us

Levi & Korsinsky is a leading securities litigation firm with a hard-earned reputation for protecting investors’ rights and recovering losses arising from fraud, mismanagement and corporate abuse.  With thirty attorneys and offices in New York, Connecticut, California and Washington D.C., the firm is able to litigate cases in various jurisdictions in the U.S., England, and in other international jurisdictions.

Levi & Korsinsky provides portfolio monitoring services for high-net worth investors and institutional clients.  Our firm also assists investors in evaluating whether to opt-out of large securities class actions to pursue individual claims.

For additional information about this case or our institutional services, please contact us.