- Company Name
- NetApp, Inc.
- Stock Symbol
- Class Period
- May 22, 2019 to August 1, 2019
- Motion Deadline
- October 13, 2019
- Northern District of California
The complaint charges NetApp and certain of its officers with violations of the Securities Exchange Act of 1934. NetApp provides a range of hybrid cloud data services that simplify management of applications and data across cloud and on-premises environments to accelerate digital transformation.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, defendants failed to disclose that the Company had been unable to close large deals within the quarter and that the deals had been pushed out to subsequent quarters or downsized, which would have a material impact on the Company’s revenue and cause the Company to lower its fiscal 2020 guidance. As a result of this information being withheld from the market, NetApp securities traded at artificially inflated prices during the Class Period of more than $65 per share, and NetApp insiders were able to sell their NetApp stock at these artificially inflated prices for insider proceeds of more than $13 million.
Then on August 1, 2019, after the market closed, the Company reported preliminary first quarter 2019 adjusted earnings per share of $0.55 to $0.60, below the average estimate of $0.83, and net revenue of $1.22 billion to $1.23 billion, below the average estimate of $1.39 billion. Additionally, the Company lowered its 2020 outlook, forecasting a net revenue decline of between 5% and 10% year-over-year. On this news, the Company’s share price fell $11.67 per share, or over 20%, to close at $46.04 per share on August 2, 2019.