RADNOR, PA / ACCESSWIRE / November 7, 2019 / The law firm of Kessler Topaz Meltzer & Check, LLP reminds Slack Technologies, Inc. (NYSE:WORK) ("Slack") investors that a securities fraud class action lawsuit has been filed on behalf of those who purchased or otherwise acquired Slack's Class Class A common stock pursuant and/or traceable to Slack's registration statement and prospectus (collectively, the "Registration Statement") for the resale of up to 118,429,640 shares of its Class A common stock whereby Slack began trading as a public company on or around June 20, 2019.
Important Deadline Reminder: Investors who purchased or otherwise acquired Slack securities during the Class Period may, no later than November 18, 2019, seek to be appointed as a lead plaintiff representative of the class. For additional information or to learn how to participate in this litigation please visit: https://www.ktmc.com/slack-technologies-work-securities-class-action?utm_source=PR&utm_medium=Link&utm_campaign=Slack.
According to the complaint, Slack offers a business technology platform that allows users to share and aggregate information from other software, take action on notifications, and advance workflows in a multitude of third-party applications.
On June 20, 2019, Slack filed its prospectus on a Form 424B4 with the SEC, which forms part of the Registration Statement. Slack registered for the resale of up to 118,429,640 shares of Class A common stock by registered shareholders at a reference price of $26.00. According to the Registration Statement, the resale of Slack's stock was not underwritten by any investment bank and the registered stockholders would purportedly elect whether or not to sell their shares.
According to the complaint, on September 4, 2019, Slack reported its second-quarter fiscal 2019 results and issued guidance for the third quarter, expecting a wider loss than analysts predicted. In a press release, Slack stated, in part, "Revenue was negatively impacted by $8.2 million of credits related to service level disruption in the quarter." On a conference call to discuss the results, Stewart Butterfield, Slack's Chief Executive Officer, stated that the disruptions were attributable, at least distantly, to issues with scaling Slack's services to encompass a greater user-load.
Following this news, Slack's share price fell $3.69 per share, nearly 12%, over two consecutive trading sessions to close at $27.38 per share on September 6, 2019.
The complaint alleges that the Registration Statement was false and misleading and omitted to state material adverse facts. Specifically, the defendants failed to disclose to investors that: (1) Slack's platform was susceptible to recurring service-level disruptions; (2) such disruptions were increasingly likely to occur as Slack scaled its services to a larger user base; (3) Slack provides credits even if a customer was not specifically affected by service-level disruptions; (4) as a result, any service-level disruptions would have a material adverse impact on Slack's financial results; and (5) as a result of the foregoing, the defendants' positive statements about Slack's business, operations, and prospects, were materially misleading and/or lacked a reasonable basis.