It was recently confirmed that Twitter is being investigated by TheGrantLawFirm, PLLC for possible securities fraud. The fraud is in connection with the Company’s statements about the net users and ad revenues that were stated during the first quarter of 2015. In addition to Twitter as a company, some of its officers and directors are also a part of the investigation.
According to the press release, the investigation is focusing on whether the company disseminated public statements that were unduly optimistic and served to mislead the public about ad revenues and revenue growth. This was related to the period between February 5th, 2015 and April 28th, 2015.
On April 28th it was learned that twitter had a loss of $162 million in the Q1 2015, which is down around $30 from the previous year. Some investors and other experts are concerned about the way Twitter is compensating some executives with stocks, and the total compensation package for these executives given the poor earnings report that was recently announced. This, combined with the accumulated losses since it first launched, has some people concerned.
Twitter stock plunged over 20% and was even frozen from further trading at one point during the day, a step that the stock exchange takes to help give investors time to think through their moves and limiting the damage done due to emotional trading.
What will come of the investigation is not yet known, but they are looking for stock holders who are interested in discussing the investigation and possibly recovering their damages so it seems that a class action suit may be coming in the near future.
A point to ponder. There have been rumors of companies looking to buy out Twitter in the past. This may make for an excellent opportunity for the right company. Google, for example, could get their long desired social network if they purchased some or all of Twitter. Microsoft too could be a potential buyer if they decided they wanted to get into the massive social market. Of course, you can never rule out Facebook from trying to buy up the competition or even Yahoo since they are always looking for an acquisition. This is just speculation, but given the situation, it is something many people are likely wondering about.
