Twitter Inc being Slapped with Lawsuit by Investor; Here’s Why

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Investor seeks to attain class action status for lawsuit against Twitter

Twitter Inc. (NYSE:TWTR) has been coming under fire from analysts and investors alike over its stagnant growth numbers for quite a while now. Shareholders have grown increasingly frustrated as Twitter’s failure to address problems has taken an immense toll on its shares. During the past 12 months, the micro blogging site’s shares declined 31.64% while the S&P 500 index jumped 11.33%.

One investor who is fed up of Twitter’s state of affairs is reportedly taking matters to a court of law. According to an earlier Re/Code report, Twitter investor Doris Shenwick has decided to sue certain members of the management for deceiving shareholders about the company’s true growth position. Ms. Shenwick noted that management had misinformed investors about Twitter’s prospects in terms of user engagement and growth. The management had promised to surpass the 500 million mark in user numbers for two years, however, it failed to do so.

According to Ms. Shenwick’s lawyer, Twitter executives had claimed back in November 2014 that the company’s monthly active users would go beyond 500 million in the mid-term and above a billion in the long term. The plaintiff further alleges that Twitter had made these claims without any concrete base. As of June, Twitter’s monthly active users stood at 313 million. Meanwhile, relatively newer social media platforms such as Snapchat and Instagram have surpassed Twitter in user growth and popularity.

Ms. Shenwick had filled the case in a federal court in San Francisco. She aims to attain class action or group status through which the lawsuit would include all shareholders who purchased Twitter shares between Feb 6, 2015 and July 28, 2015. It is yet unclear how many shares Ms. Shenwick owns. Also at present, it is unclear whether or not any other shareholders have joined the lawsuit.

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