Nimble Storage Inc. Hid Falling Sales
California-based Nimble Storage Inc., a data storage company, is accused of failing to keep shareholders informed about their difficulties keeping up with its larger competitors, causing a drop in the stock price once the information became public. As a result, a proposed investor class action lawsuit was filed in California federal court.
The plaintiff seeking class certification alleges that the company’s executives released information via news releases and analyst phone calls that exaggerated the company’s success transitioning from small and medium-sized IT organizations as customers to larger ones. The subsequent quarterly results fell short of expectations, and the statements had the effect of creating an “unrealistically positive assessment of Nimble storage…causing the company’s securities to be overvalued and artificially inflated,” according to the complaint.
Nimble’s strategy to introduce products aimed at landing large-scale companies backfired when their larger competitors slashed prices to maintain their market share, resulting in lower sales than Nimble anticipated. At the same time, the company lost some of its smaller customers that were at the core of Nimble’s old business strategy. Because of this, the complaint alleges that executives knew that their statements were false or misleading.
Once the news broke, shares dropped the next day from $21.39 per share to $10.05 per share, a 51 percent decrease.
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If you own stock in Nimble Storage Inc., you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities fraud attorney for a consultation today.