On February 28, 2024, Nextdoor Holdings, Inc. f/k/a Khosla Ventures Acquisition Co. II was sued for violations of the federal securities laws in the United States District Court for the Northern District of California on behalf of all purchasers of the publicly traded Class A common stock of Nextdoor between July 6, 2021 and November 8, 2022, inclusive (the “Class Period”).
Recent Security Class Actions
According to the Complaint, The Children’s Place, Inc. is a specialty portfolio of children’s brands. The Company designs, contracts to manufacture, and sells apparel, accessories and footwear, primarily under its proprietary brands: “The Children’s Place,” “Gymboree,” “Sugar & Jade,” and “PJ Place.” The Company’s retail and wholesale network includes four digital storefronts, more than five hundred stores in North America, wholesale marketplaces and distribution in sixteen countries through six international franchise partners.The Complaint alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, the Complaint alleges Defendants failed to disclose to investors: (1) that the Company was engaged in aggressive promotions; (2) that, as a result, the Company’s inventory values were overstated; (3) that the foregoing was reasonably likely to have an adverse impact on fiscal 2023 financial results; and (4) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
According to the Complaint, Nextdoor Holdings, Inc. began as Khosla Ventures Acquisition Co. II, a blank check company formed by the Sponsor Defendants. On July 6, 2021, KV Acquisition Co. and Nextdoor Private jointly announced they had entered into a merger agreement.Nextdoor operates a hyperlocal online social networking platform that connects neighbors, public agencies, and businesses via the internet. Nextdoor purports to facilitate this online community through various features and technological functions including a news feed where “neighbors” (i.e., users) can view posts, discussions, and pictures from other neighbors, as well as notifications, comments, and groups. At bottom, these features enable users to exchange information, services, and goods. The Complaint alleges that throughout the Class Period, Defendants made false and/or misleading statements and/or failed to disclose that: (a) that Nextdoor’s financial results prior to the Merger had been temporarily inflated by the ephemeral effects of the COVID-19 pandemic, which had pulled forward demand for Nextdoor’s platform and cannibalized future advertising revenue growth; (b) that, rather than being sustained, such growth trends had already begun reversing at the start of the Class Period; (c) that Nextdoor’s total addressable market was materially smaller than the 312 million households represented to investors; (d) that, by the start of the Class Period, Nextdoor’s most important market, the U.S. market, was already substantially saturated, impairing the Company’s ability to monetize users and increase its ARPU or U.S. WAUs; (e) that, as a result of (a)-(d) above, Nextdoor’s revenue guidance for fiscal year 2022 had no reasonable basis in fact and the Company was tracking tens of millions of dollars below the revenue trajectory provided to investors.
On February 28, 2024, The Children's Place, Inc. was sued for violations of the federal securities laws in the United States District Court for the District of New Jersey on behalf of investors who purchased or otherwise acquired The Children’s Place securities between March 16, 2023 and February 8, 2024, inclusive (the “Class Period”).
According to the Complaint, Palo Alto Networks, Inc. is a global cybersecurity company that provides platforms and services to help secure enterprise users, networks, clouds, and endpoints. The Company focuses on four fundamental areas: network security, cloud security, security operations, and Unit 42 to provide threat intelligence and security consulting. Its subscription offerings include cloud-delivered security services, secure access service edge, cloud security, and security operations. The Complaint alleges that throughout the Class Period, Defendants made false and/or misleading statements, as well as failed to disclose material facts, including that: (1) the Company’s consolidation and platformization initiatives were not driving increased market share to a significant degree; (2) the Company would need to ramp up platformization and free product offerings to entice customers to adopt more of their platforms; (3) the Company’s high growth in billings was not sustainable; (4) new AI offerings were not facilitating greater platformization and consolidation; and (5) based on the foregoing, Defendants lacked a reasonable basis for their positive statements about customer demand, billings, and platformization, as well as related financial results, growth, and prospects.
On February 26, 2024, Palo Alto Networks, Inc. was sued for violations of the federal securities laws in the United States District Court for the Northern District of California on behalf of investors who purchased, or otherwise
acquired, Palo Alto Network common stock during the period from August 18, 2023 through February 20, 2024, inclusive (the “Class Period”).
According to the Complaint, Lantronix, Inc. is a global industrial and enterprise IoT provider of solutions that purportedly target high growth applications in specific verticals such as smart grids, intelligent transportation, smart cities, and AI data centers. The Company organizes its products and solutions into three product lines: (i) Embedded IoT Solutions, (ii) IoT System Solutions, and (iii) Software & Services.The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and prospects. Specifically, the Complaint alleges Defendants made false and/or misleading statements and/or failed to disclose that: (i) Lantronix overstated demand and/or its visibility into demand for its IoT products; (ii) Lantronix’s customers were reducing elevated levels of inventory of IoT products, thereby causing a general slowdown in the Company’s business; (iii) certain of Lantronix’s embedded IOT revenues expected from a customer design win were delayed to the next fiscal year; (iv) as a result of all the foregoing, Lantronix anticipated lower sales for its embedded IOT solutions for fiscal year 2024; (v) accordingly, Lantronix was unlikely to meet its own previously issued guidance for fiscal year 2024; and (vi) as a result, the Company’s public statements were materially false and/or misleading at all relevant times.
On February 23, 2024, Lantronix, Inc. was sued for violations of the federal securities laws in the United States District Court for the Central District of California on behalf of investors who purchased or otherwise acquired Lantronix securities between May 11, 2023 and February 8, 2024, both dates inclusive (the “Class Period”).
According to the Complaint, Innodata Inc. is a global data engineering company that purports to be “delivering the promise of AI to many of the world’s most prestigious companies.” The Company states that it provides AI-enabled software platforms and managed services for AI data collection/annotation, AI digital transformation, and industry-specific business processes.The Complaint alleges that throughout the Class Period, Defendants made false and/or misleading statements, as well as failed to disclose material facts, including that Innodata: (1) did not have a viable AI technology; (2) its Goldengate AI platform is a rudimentary software developed by just a handful of employees; (3) it was not going to utilize AI to any significant degree for new Silicon Valley contracts; (4) it was not effectively investing in research and development for AI; and (5) based on the foregoing, Defendants lacked a reasonable basis for their positive statements about Innodata’s AI business and development and related financial results, growth, and prospects.
On February 21, 2024, Innodata Inc. was sued for violations of the federal securities laws in the United States District Court for the District of New Jersey on behalf of investors who purchased or otherwise acquired, Innodata common stock during the period from May 9, 2019 through February 14, 2024, inclusive (the “Class Period”).
