Twitter Sued by Shareholder Over Alleged False Growth Claims

Embattled social media giant Twitter Inc (NYSE:TWTR) now has an unexpected problem on its hands, with a shareholder filing a federal lawsuit claiming the company misled investors about its growth prospects.

From Bloomberg:

Shareholder Doris Shenwick claims Twitter executives misled investors on its growth prospects in November 2014, promising an increase in monthly active users to 550 million in the “intermediate” term and more than a billion in the “longer term.” The company failed to deliver on either estimate and concealed that it had no basis for those projections, the complaint said. As of June 30, the company had 313 million monthly active users, according to its website.

The lawsuit seeks class-action, or group, status to represent all shareholders who bought stock between Feb. 6, 2015, and July 28, 2015. Twitter officials didn’t immediately respond to an e-mail seeking comment on the filing.

The lawsuit was filed on Friday in a San Francisco federal court. There’s no word yet on how much money Shenwick hopes to recover, but Twitter shares have plunged over 50% since the company made the claims in question last year.

Twitter has struggled recently amid tepid user growth and increased competition from other social media upstarts like Snapchat. The company recently discussed putting itself up for sale at a recent board meeting, and CEO Jack Dorsey’s days could be numbered if he doesn’t begin to turn things around soon.

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Twitter shares closed at $19.11 on Friday, up $0.81 (4.43%), helped by positive sentiment stemming from its first of ten scheduled streaming broadcasts of live NFL games on its platform.

According to CNBC, the initial game drew 2.1 million viewers.

Another potential boon for Twitter is its decision to partially expand its famous 140-character message limit. The company is reportedly set to roll out exceptions to this rule over the next few months, with images and quoted text no longer counting against the character limit.

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