Due to a 96 percent drop in its stock price compared to its fourth-quarter 2021 highs, an Allbirds shareholder has filed a lawsuit in the Northern District of California against the environmentally conscious footwear maker, accusing the company of providing false and misleading information in its November 2021 IPO prospectus and SEC registration statement, which hid structural deficiencies in the business.
In the company’s initial public offering, 16,850,799 Class A common stock shares were sold at $15.00 per share, raising approximately $237 million in net proceeds. The lawsuit covers the period from the company’s Nov. 4, 2021, IPO until March 9, 2023, when Allbirds reported a 13 percent decline in Q4 sales and a net loss of $24.9 million. The full-year net loss was $101.4 million, leading to a 47 percent drop in shares the next day to $1.25 per share. Allbirds’ low was $1.06 per share, down 93 percent from its IPO and 96 percent from its high of $26.76 on Nov. 18, 2021.
The lawsuit alleges violations of the Securities Act and the Exchange Act. It claims that Allbirds’ management overemphasized trendy non-core offerings at the expense of core products that were popular with customers. The plaintiff brings the action as a class action and expects class members to number in the hundreds or even thousands. Nearly 30 defendants are named, including the company’s directors, co-CEOs Joseph Zwillinger and Timothy Brown, and former CFO Michael Bufano, who resigned at the time of the Q4 2022 earnings announcement. The defendants also include several investor firms as underwriters of the IPO.
Investors wishing to serve as lead plaintiffs must act by June 12. A lead plaintiff acts on behalf of other class members in directing the litigation. The ability to share in any recovery does not require serving as lead plaintiff.
