SAN DIEGO--(BUSINESS WIRE)--Robbins Geller Rudman & Dowd LLP (https://www.rgrdlaw.com/cases-contextlogic-inc-class-action-lawsuit.html) announces that 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 of ContextLogic securities between December 16, 2020 and May 12, 2021 (the “Class Period”) have until July 16, 2021 to seek appointment as lead plaintiff in the ContextLogic class action lawsuit. The case – captioned Boehning v. ContextLogic Inc., No. 21-cv-03671, and assigned to Judge James Donato – was filed by Robbins Geller Rudman & Dowd LLP on May 17, 2021. A similar lawsuit, captioned Hoang v. ContextLogic, Inc., No. 21-cv-03930, was filed on May 25, 2021.
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 securities 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 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 J.C. Sanchez of Robbins Geller, at 800/449-4900 or 631-454-7719 or via e-mail at jsanchez@rgrdlaw.com. Lead plaintiff motions for the ContextLogic class action lawsuit must be filed with the court no later than July 16, 2021. You can view a copy of the first-filed complaint 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, 2021, 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.
With 200 lawyers in 9 offices nationwide, Robbins Geller Rudman & Dowd LLP is the largest U.S. law firm representing investors in securities class actions. Robbins Geller attorneys have obtained many of the largest shareholder recoveries in history, including the largest securities class action recovery ever – $7.2 billion – in In re Enron Corp. Sec. Litig. The 2020 ISS Securities Class Action Services 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 securities plaintiffs’ firm. Please visit http://www.rgrdlaw.com for more information.
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