Jack Dorsey is ready to splash some cash. Twitter (TWTR) has agreed to pay a whopping $810m to settle a shareholder class-action lawsuit accusing the company of overemphasizing its growth prospects back in 2014. Twitter had promised an increase of 550 million users in the “intermediate” term and more than a billion in the long run. Instead, the company failed to meet expectations and admitted no basis for its whacky projections. However, Twitter cares to specify that no wrongdoing was committed by its executives back in the day. The predictions appear to have been caused by a surge in optimism that died down quickly.
The lawsuit was filed in 2016 after Twitter’s stock plunged a year prior due to disappointing results. Jack Dorsey’s company will pay the settlement in the fourth quarter of 2021.
why it matters
After the news broke, Twitter's shares dropped 2.43%. The days when big tech companies were only accused of the way they handled users' data appear to be over. Both Twitter and Facebook will soon have to defend themselves against a class-action lawsuit headed by Donald Trump on the topic of free speech.