- Company Name
- Ideanomics, Inc.
- Stock Symbol
- Class Period
- May 15, 2017 to November 13, 2018
- Motion Deadline
- September 17, 2019
- Southern District of New York
The complaint charges Ideanomics and certain of its officers with violations of the Securities Exchange Act of 1934. Ideanomics is a financial technology and asset digitization services company. The Company’s “business model is to become a next-generation [fintech] company, with the intention of offering both traditional financing solutions and digital financing solutions based on the emergence of trading systems that utilize blockchain and artificial intelligence technologies.”
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse facts about the Company's business, operations, and prospects. Specifically, defendants failed to disclose that margins in Ideanomics’ oil trading and consumer electronics businesses were too low for those businesses to remain viable, and costs associated with building out Ideanomics’ U.S. infrastructure and hiring its new executive team were negatively impacting the Company’s bottom line performance. As a consequence of these trends in Ideanomics’ business, it was highly unlikely the Company would meet its 2018 EBITDA guidance. As a result of this information being withheld from the market, Ideanomics securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of nearly $6 per share.
Then on November 14, 2018, Ideanomics announced its financial results for the third quarter of 2018. The Company reported that it intended “to phase out [its] oil trading and consumer electronics businesses, with the intention to fully divest these assets in the near future,” citing “low margins in relation to top line sales.” Ideanomics further reported that “[c]osts associated with building out [its] U.S. infrastructure and hiring [its] new executive team have put a strain on [its] bottom line performance, resulting in [an] increased net loss for the third quarter of 2018 as compared to the third quarter of 2017,” and that, accordingly, the Company did “not anticipate meeting [its] EBITDA guidance of $35 million for fiscal year 2018.” On this news, Ideanomics’ stock price fell $1.59 per share, or more than 48%, to close at $1.67 per share on November 14, 2018.