The latest trouble facing Twitter comes in the form of a lawsuit filed by an investor claiming the tech giant misled the public about its growth prospects and that huge swings in stock prices followed. CNet reports that the lawsuit, filed on Friday in San Francisco, alleges the company made baseless claims that its user base would eventually grow to one billion and is seeking class action status.
The supposed offending projections were made in November of 2014 when, according to the suit, Twitter "reported that the number of [monthly active users] was expected to increase significantly 'to over 550 million [MAUs] in the intermediate term and . . . over a billion . . . [MAUs] over the longer term.' "
This projection supposedly caused the company's stock prices to soar, but soon thereafter much smaller user growth numbers caused stock prices to drop. According to Statista, an internet statistics company, Twitter currently has 313 million monthly active users.
"As a result of defendants’ false statements, Twitter common stock traded at artificially inflated prices during the Class Period," reads the suit. "However, after the above revelations seeped into the market, the Company’s stock was hammered by massive sales, sending Twitter’s stock price down 40% from its Class Period high of $52.87 per share on April 7, 2015, and causing economic harm and damages to plaintiff and members of the Class (as defined below)."
Interestingly, this lawsuit follows news earlier in the month that Twitter was possibly considering a buyout from an unnamed third party for as much as $18 billion — despite the fact that the company is still apparently losing money.
Twitter did not respond to CNet's request for comment. Its stock currently trades below $20.
Related: Twitter Board To Mull Possible Buyout This Week, And More Layoffs May Be Looming