Pivotal Software, Inc.
- Company Name
- Pivotal Software, Inc.
- Stock Symbol
- Class Period
- April 24, 2018 to June 4, 2019, including purchasers of Pivotal common stock pursuant and/or traceable to the Company’s April 20, 2018 initial public offering
- Motion Deadline
- August 19, 2019
- Northern District of California
The complaint charges Pivotal, certain of its officers and directors and the underwriters of Pivotal’s April 20, 2018 initial public offering (“IPO”) with violations of the Securities Exchange Act of 1934 and/or Securities Act of 1933. Pivotal, together with its subsidiaries, provides a cloud-native application platform and services in the United States, which purportedly accelerate and streamline software development by reducing the complexity of building, deploying, and operating new cloud-native and modern applications and modernizing legacy applications.
On December 15, 2017, defendants filed with the SEC a draft Registration Statement on Form S-1, which, following a series of amendments in response to SEC comments, would be used for the IPO. The SEC declared the Registration Statement effective on April 19, 2018, and on or about April 20, 2018, defendants filed the final Prospectus for the IPO. On April 24, 2018, the Company completed the IPO, issuing a total of 42.55 million shares (including the underwriters’ over-allotment option) at $15.00 per share, generating over $638 million for defendants.
The complaint alleges that throughout the Class Period and in the offering documents for the IPO, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding the Company’s business, operations, and prospects. Specifically, defendants failed to disclose that Pivotal was facing major problems with its sales execution and the “complex technology landscape,” as Pivotal’s customers and the industry’s sentiment had shifted away from the Company’s principal products, which were outdated, inadequate, and incompatible with the industry-standard platform, resulting in deferred sales, lengthening sales cycles, and diminished growth. As a result of this information being withheld from the market and omitted from the offering documents for the IPO, Pivotal securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of more than $28 per share.
Then on June 4, 2019, after the market closed, Pivotal reported its financial and operating results for the first quarter of fiscal 2020. The Company advised investors that “sales execution and a complex technology landscape [had] impacted the quarter.” Wedbush Securities called the quarter a “train wreck” and characterized the Company’s operating results as “disastrous,” asserting that Pivotal’s “management team does not have a handle on the underlying issues negatively impacting its sales cycles and the activity in the field which gives us concern that this quarter will be the start of some ‘dark days ahead’ for Pivotal (and its investors).” On this news, the price of Pivotal stock fell $7.65 per share to close at $10.89 per share on June 5, 2019, a one-day decline of over 40%, and 27% below the IPO price of $15 per share.