Facebook shareholders who accused the social media giant of withholding growth concerns ahead of its listing on the stock market in 2012 have been granted permission to go ahead with two class action lawsuits.
Facebook says the decision to allow shareholders to sue the company as two larger groups is "without merit", and tried to press for them to have to file individual lawsuits. But District Judge Robert Sweet said the size of the case "in fact adds more weight to the predominance of common questions and answers, practically negating the individualized [sic] questions raised".
The shareholders claim they lost money when Facebook joined the Nasdaq stock market in 2012. They bought shares at $38 each. The listing raised $16 billion for the social network. The investors are accusing Facebook of withdrawing revised revenue projections, which would have reduced the initial price of the shares. Particularly, the revision contained information on the effects of increasing mobile usage when their was far less mobile advertising than you would find on a phone today.
Mr Sweet did say that Facebook provided "an impressive amount of evidence" regarding the impact on revenues caused by the transition to the mobile app.