Investing.com – Twitter stock (NYSE:TWTR) fell nearly 4% Monday as the social platform agreed to pay $809.5 million to settle a five-year-old case that alleged its officials misled investors in painting a rosier picture about the company.
The original lawsuit, filed by shareholder Doris Shenwick, alleged Chief Executive Officer Jack Dorsey, former CEO Dick Costolo and board member Evan Williams hid facts about Twitter’s slowing user growth while they sold their personal stock holdings.
According to Bloomberg, the suit claimed executives misled investors over the company’s 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 it had no basis for those projections, according to the complaint.
The complaint also alleged the company was tracking daily active users as a lead indicator of user engagement by early 2015 but didn’t reveal that to investors at the time, choosing to report monthly active user figures. According to the lawsuit, the DAU data showed that user engagement growth at the social platform was either flat or declining.
The company said it intends to use cash on hand to pay the settlement amount, which is expected to happen in the next quarter.
The company said the settlement doesn’t mean admission of any wrongdoing. There can be no assurance that the final settlement agreement will be executed or that such agreement will be approved by the court, it said.
The company closed the second-quarter with approximately $8.61 billion in cash, cash equivalents, and marketable securities.