Shift4 Payments, Inc.

A securities class action has been filed against Shift4 Payments, Inc. (FOUR) on securities class action lawsuit has been filed on behalf of investors who purchased or acquired the securities of Shift4 Payments, Inc. between November 10, 2021 through April 18, 2023.  This case has been filed in the USDC – E.D.PA.

According to the Complaint, Shift4 provides software and payment processing solutions in the U.S. The Company provides, among other products and services, integrated and mobile point-of-sale (“POS”) solutions.

Plaintiff alleges that Defendants made materially false and misleading statements throughout the Class Period.  Among other things, Defendants failed to disclose to investors that: (i) Shift4 had inadequate disclosure controls and procedures and internal control over financial reporting; (ii) as a result, Shift4 failed to properly account for customer acquisition costs, thereby artificially inflating its net cash provided by operating activities; (iii) accordingly, Shift4 would likely be forced to restate one or more of its previously issued financial statements; (iv) Shift4 employed accounting maneuvers in connection with, among other things, its mass strategic buyout program and sponsor bank merchant settlement account, that were designed to present an inaccurate picture of, inter alia, the Company’s performance, its underlying business quality, and its earnings power; and (v) all the foregoing, once revealed, was likely to negatively impact Shift4’s reputation and business.

On April 19, 2023, Blue Orca Capital published a report alleging, among other things, that “Shift4 [is], in reality, a roll-up of low-tech POS systems and payment processors which is substantially less profitable, generates far less cash, and is materially more levered than investors are led to believe.” The Blue Orca Report further alleged that in 2022, “Shift4 engaged in a string of highly questionable and hyper-aggressive accounting maneuvers seemingly designed to keep the stock afloat, from cash flow manipulation to inexplicable distributor acquisitions that enabled it to capitalize a major component of COGS [cost of goods sold].” For example, the Blue Orca Report alleged, inter alia, that Shift4’s “buyout of 50% of its independent distributors” – i.e., in connection with its mass strategic buyout program – “and Q4 2022 cash account withdrawal” from its sponsor bank merchant settlement account “together inflated operating cash flow by 61%.”

On this news, Shift4’s stock price fell $5.95 per share, or 8.68%, to close at $62.59 per share on April 19, 2023.