- Company Name
- Pluralsight, Inc.
- Stock Symbol
- Class Period
- August 2, 2018 to July 31, 2019
- Motion Deadline
- October 12, 2019
- Southern District of New York
The complaint charges Pluralsight and certain of its officers with violations of the Securities Exchange Act of 1934. Pluralsight is a provider of cloud-based and video training courses for, among others, software developers, IT administrators, and creative professionals.
The Company completed its initial public offering in May 2018, selling 23.8 million shares of Pluralsight stock at $15.00 per share. Less than a year later, on March 6, 2019, Pluralsight completed a secondary public offering (“SPO”) of 15.6 million shares of stock at $29.25 per share, raising gross proceeds of more than $450 million. The SPO served as a massive cash-out for Pluralsight insiders, as all of the proceeds went to insiders and related parties and none to help fund corporate development or Company initiatives.
The complaint alleges that throughout the Class Period, Pluralsight misrepresented and/or failed to disclose adverse facts regarding the Company’s business and prospects. Specifically, the Company failed to disclose that Pluralsight was experiencing substantial delays in hiring and properly training the salesforce necessary to meet its lofty billing projections. In addition, the Company knew at the time of the SPO that it was behind schedule onboarding new sales representatives, which was hurting the Company’s sales execution and preventing Pluralsight from meeting its high growth projections. Instead of disclosing such facts at the time of the SPO, defendants intentionally obscured and failed to disclose this pertinent information to investors. As a result of defendants’ misrepresentations and omissions, Pluralsight stock traded at artificially inflated prices of more than $36 per share during the Class Period, which allowed Company insiders to cash out their Pluralsight stock at inflated prices in the SPO.
Then on July 31, 2019, after the market closed, Pluralsight announced disappointing financial results for the second quarter of 2019, disclosing that its billings growth rate had sharply deteriorated. The Company blamed its declining growth in billings on sales execution challenges and other issues with its salesforce. Pluralsight also disclosed that its Chief Revenue Officer was resigning. In response to these disclosures, the price of Pluralsight stock plummeted, falling $12.13 per share in a single day – or nearly 40% – to close at $18.56 per share on August 1, 2019.