New York, New York--(Newsfile Corp. - October 7, 2019) - Faruqi & Faruqi, LLP, a leading national securities law firm, reminds investors in Dropbox, Inc. (NASDAQ: DBX) ("Dropbox" or the "Company") of the December 3, 2019 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.
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If you invested in Dropbox stock or options pursuant and/or traceable to the Company's March 23, 2018 initial public offering ("IPO") and would like to discuss your legal rights, click here: www.faruqilaw.com/DBX. There is no cost or obligation to you.
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Attn: Richard Gonnello, Esq.
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The lawsuit has been filed in the U.S. District Court for the Northern District of California on behalf of all those who purchased Dropbox Class A shares of common stock pursuant and/or traceable to the Company's March 23, 2018 IPO. The case, Deinnocentis v. Dropbox, Inc. et al., No. 19-cv-06348 was filed on October 4, 2019.
The lawsuit focuses on whether the Company and its executives violated federal securities laws by failing to disclose that the Registration Statement contained untrue statements of material fact or omitted to state other facts necessary to make the statements made not misleading and was not prepared in accordance with the rules and regulations governing its preparation.
Specifically, the Registration Statement claimed that a significant proportion of the Company's registered user base was primed for monetization. It claimed that 300 million of the Company's 500 million registered users had unique characteristics making them likely to be monetized over time, purportedly presenting a "significant opportunity to increase [the Company's] revenues." The Registration Statement also described Dropbox's business model as involving the "[i]ncrease conversion of registered users to [the Company's] paid subscription plans." It highlighted the Company's increase of paid users from 6.5 million users in 2015 to 11 million users by 2017, representing 69% growth over two years.
In connection with its second quarter 2019 earnings report, Dropbox still claimed to have "more than 500 million registered users" as of June 2019, indicating that the Company had experienced essentially no significant registered user growth since December 31, 2017 - months prior to the IPO. The Company had only converted an additional 2.6 million paid users in the year-and-a-half since the IPO, representing an annualized post-IPO growth rate of only 15% and less than 1% of the "300 million" figure provided in the Registration Statement. Similarly, the Company's revenue growth rate had dramatically decelerated to only 18% for 2019, a sharp decline from the 40% and 31% annual growth rates highlighted in the Registration Statement.
Since Dropbox's IPO, the Company's share price has declined from its IPO price of $21.00 by approximately 16%.
The court-appointed lead plaintiff is the investor with the largest financial interest in the relief sought by the class who is adequate and typical of class members who directs and oversees the litigation on behalf of the putative class. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. Your ability to share in any recovery is not affected by the decision to serve as a lead plaintiff or not.
Faruqi & Faruqi, LLP also encourages anyone with information regarding Dropbox's conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
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