A securities class action has been filed against Aterian, Inc. (ATER) on behalf of investors that purchased Aterian, Inc. (NASDAQ: ATER) securities between December 11, 2020 through May 3, 2021. This case has been filed in the USDC – S.D.N.Y.
On May 4, 2021, before the markets opened, analyst Culper Research issued a scathing report concerning Aterian. In its report, Culper wrote that “the Company has ties to convicted criminals and is promoting what we believe is an overhyped ‘AI’ narrative and a string of garbage acquisitions to mask the failure of its already ill-conceived core business.” Culper continued that “Aterian has been largely unsuccessful in convincing other Amazon sellers to pay for its ‘AIMEE’ AI platform, and at least 5 former employees and a former customer have expressed doubts regarding AIMEE’s legitimacy. We think that Aterian’s underlying business has failed, forcing the Company to obscure its poor performance with a series of questionable acquisitions.” Culper further wrote: “[w]e believe that there are serious problems with Aterian’s claims to maintain strong organic growth and to drive M&A synergies: to us, neither of these appears to be the case. . .. In our view, this suggests not only that Aterian is unable to grow EBITDA at acquired businesses, but that its core business is also failing to produce.”
On this news, the price of Aterian stock fell from its May 3, 2021 close of $20.66 to a May 5, 2021 close of $15.72 per share, a two-day drop of $3.04 per share or approximately 24%.
The complaint alleges that throughout the class period defendants made false and/or misleading statements and/or failed to disclose that: (1) Aterian’s organic growth is plummeting; (2) Aterian’s recent, self-lauded acquisitions were overpayments for flawed assets from questionable sources; (3) Aterian’s purported artificial intelligence software is a flawed product that lacks customer interest; (4) Aterian uses rebate programs and paid or artificial reviews to pump up their product offerings; and (5) as a result, the Company’s public statements were materially false and misleading at all relevant times.