Twitter agrees to pay $809,500,000 after misleading growth projections in 2016.

Twitter is one of the largest social medias well known for much of the worlds celebrities being able to share “the small things” that you wouldn’t usually see on instagram or facebook.

Basically, in 2014 Twitter executives had lied to investors that they are promised to see a increase in average monthly users to 550 million over the intermediate term and a billion over the long term. This is unreasonable and was clearly a overestimate of the amount of users that they would get. However, this is not impossible since Facebook receives 2.89 billion active monthly users.

Twitter lying to investors led to much of their stock price declining. The last time they reported their monthly users was April 2019 which the users was still at 330 million. So instead of the growth they had promised Twitter had practically stayed the same in monthly users.

Twitter had also announced the final settlement agreement will not “include or constitute an admission, concession, or finding of any fault, liability, or wrongdoing by the Company or any defendant.” The agreement still requires court approval; the consolidated case was being heard in the U.S. District Court for the Northern District of California.

The company said it intends to use cash on hand to pay the settlement amount, expected to be paid in the fourth quarter of 2021. Twitter expects to record a charge for the settlement during the third quarter of 2021.

The company introduced the mDAU metric with its Q4 2018 results, telling investors it believes that best reflects its goals of driving monetizing usage. Twitter defines mDAUs as the average number of “people, organizations or other accounts who logged in or were otherwise authenticated and accessed Twitter on any given day through or Twitter applications that are able to show ads.”

In July, Twitter reported that its mDAU, or monetized daily active users, grew to 206 million for the quarter that ended in June. The user growth helped the company, which makes most of its revenue from ads, post a 74% increase in quarterly revenue, to $1.19 billion. 

With settlements as large as this we might be seeing more corporations take the same kind of settlements for lying to investors.


Categories: Tech&Innovation