ContextLogic investors who wish to learn more about the litigation and how to seek appointment as lead plaintiff should click here or contact Sharon M. Lee of Lieff Cabraser toll-free at 1-800-541-7358.
Background on the ContextLogic Securities Class Litigation
ContextLogic, headquartered in San Francisco, California, is a global mobile e-commerce company that operates the Wish platform that connects its value-conscious user base to merchants. Wish generates revenue by charging merchants a commission on sales made in its marketplace. On December 16, 2020, ContextLogic completed its IPO by issuing and selling more than 46 million shares of its Class A common stock at $24 per share, raising more than $1.1 billion in proceeds.
The action alleges that throughout the Class Period, defendants made materially false and misleading statements and omissions about the strength of ContextLogic’s business operations and financial prospects by overstating its then-present monthly active users (“MAUs”) and MAU growth trends. For example, in its IPO registration statement, declared effective on December 15, 2020, ContextLogic reported it had 108 million MAUs as of September 30, 2020, and emphasized sustained MAU growth from just 21 million MAUs since 2015. ContextLogic also underscored the importance of this performance metric by claiming that “[w]e 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.”
On March 8, 2021, ContextLogic reported disappointing results for the fourth quarter and full year 2020 and revealing that its MAUs had “declined 10% YoY during Q4 to 104 million.” On this news, ContextLogic’s stock price fell $1.83 per share, or more than 10%, from its closing price of $17.77 on March 5, 2021, to close at $15.94 on March 8, 2021, on unusually high trading volume. That same day, the Company issued Q1 sales guidance of $735-750 million (representing year-over-year growth of 67-70%), based on continued strong demand for its Wish platform.
On May 12, 2021, ContextLogic revealed that that its MAUs had declined another 7% to 101 million during Q1. In addition, the Company issued disappointing revenue guidance for the second quarter 2021. On this news, ContextLogic’s stock price fell $3.36 per share, or approximately 29%, from its closing price of $11.47 on May 12, 2021, to close at $8.11 per share on May 13, 2021, on unusually high trading volume.
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Source/Contact for Media Inquiries Only
Sharon M. Lee
Lieff Cabraser Heimann & Bernstein, LLP