When Facebook opened its first headquarters in Africa this year June, 2015, it was a bid to expand the social network’s empire, however, it seems their legal troubles with its initial public stock offering are far from over.
The company has suffered a blow after a federal judge certified two shareholder class actions accusing the company of hiding concerns about its growth forecasts prior to their May 2012 IPO.
Facebook criticises the shutdown of programme giving free basic internet services to more than 3 million Egyptians: https://t.co/d9frCnNOER— Louisa Loveluck (@leloveluck) December 30, 2015
In the grand scheme of things they have got bigger challenges to face.
The decision dated December 11, 2015 was made by U.S. District Judge Robert Sweet in Manhattan but was kept under seal.
According to the judge, the retail and institutional investors who claimed to lose money from buying Facebook shares at inflated prices in connection with the $16 billion IPO may pursue their respective claims as groups.
The company made its market debut on May 18, 2012 at $38 per share. Its share price fell to $17.55 on September 4, 2012 and stayed below the IPO price for more than a year.
Judge Sweet said Facebook “marshaled an impressive amount of evidence” to suggest that shareholders knew how mobile usage would affect revenue and rejected the company’s argument that shareholders should pursue their claims individually, which might prove costly and reduce recoveries.
Darren Sinden, an Admiral Markets analyst said investors were not too worried about the development.
“Facebook prior to the flotation was subject to a number of similar actions from people looking for a bigger piece of the pie as it were – trying to stake their claim to part of the company,” he said.
When stocks rebounded and closed on Tuesday, Facebook gained $1.33 at $107.26 on Nasdaq, which gave it a roughly $303 billion market value according to data by Reuters.