Lead Plaintiff Deadline: 10/26/2020
SUMMARY OF CASE:
A securities class action has been filed against Fastly, Inc. (FSLY) on behalf of a class consisting of all persons or entities who purchased Fastly common stock between May 6, 2020 through August 5, 2020. This case has been filed in the USDC – N.D.CA.
On August 5, 2020 after market close, Fastly held its second quarter (“Q2”) 2020 earnings conference call. During the call, Defendants disclosed that ByteDance, the Chinese company that operates the wildly popular mobile app TikTok, was Fastly’s largest customer in Q2 2020, and that TikTok represented about 12% of Fastly’s revenue for the six months ended June 30, 2020.
This news shocked the market, as TikTok had been under heavy scrutiny by U.S. officials and others since at least late 2019 due to fears that the data it collects from its users could be accessed by the Chinese government. Indeed, on July 31, 2020, President Trump announced a plan to ban TikTok in the U.S. over national security concerns. As Fastly’s Chief Executive Officer (“CEO”) admitted on the Q2 2020 earnings call, “any ban of the TikTok app by the US would create uncertainty around our ability to support this customer[,]” and “the loss of this customer’s traffic would have an impact on our business.”
On this news, Fastly’s share price fell $19.28, or approximately 17.7% from the previous trading day’s closing price of $108.92, to close at $89.64 on August 6, 2020. Fastly’s shares continued to decline on August 6, 2020, when President Trump issued an executive order effectively banning TikTok, dropping another $10.31 per share from the closing price on August 6, 2020, or approximately 11.5%, to close at $79.33 on August 7, 2020.
The Complaint alleges that During the Class Period, Defendants knowingly and/or recklessly made false and/or misleading statements about the Company’s business, operations, and prospects. Specifically, Defendant made false and/or misleading statements and/or failed to disclose: (1) that Fastly’s largest customer was ByteDance, operator of TikTok, which was known to have serious security risks and was under intense scrutiny by U.S. officials; (2) that there was a material risk that Fastly’s business would be adversely impacted should any adverse actions be taken against ByteDance or TikTok by the U.S. government; and (3) that, as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
As the truth was revealed, the price of Fastly stock declined and Plaintiff and the Class suffered losses and were directly and proximately damaged thereby.