Securities Litigation Partner James (Josh) Wilson Encourages Investors Who Suffered Losses In Sprout Social To Contact Him Directly To Discuss Their Options
If you purchased or acquired securities investing in Sprout Social stock or options between November 3, 2021 and May 2, 2024 and would like to discuss your legal rights, call Faruqi & Faruqi partner Josh Wilson directly at 877-247-4292 or 212-983-9330 (Ext. 1310). You may also click here for additional information: www.faruqilaw.com/SPT.
NEW YORK, July 12, 2024 (GLOBE NEWSWIRE) -- Faruqi & Faruqi, LLP, a leading national securities law firm, is investigating potential claims against Sprout Social, Inc. (“Sprout Social” or the “Company”) (NASDAQ: SPT) and reminds investors of the July 12, 2024 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.
Faruqi & Faruqi is a leading national securities law firm with offices in New York, Pennsylvania, California and Georgia. The firm has recovered hundreds of millions of dollars for investors since its founding in 1995. See www.faruqilaw.com.
As detailed below, the complaint alleges that the Company and its executives violated federal securities laws by making false and/or misleading statements and/or failing to disclose that: (1) Sprout Social did not have the ability to sell software to larger enterprise customers; (2) Sprout Social did not execute on its purported go-to-market strategies for enterprise customers; (3) Sprout Social was forced to overpay for Tagger Media, Inc. (“Tagger”) in order to satisfy the requirements of enterprise customers; (4) as a result of the Company's move “upmarket,” Sprout Social was experiencing longer sales cycles and poor pipeline generation; and (5) as a result of the above, Defendants' statements about Sprout Social's business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.
On May 2, 2024, after the markets closed, Sprout Social announced the Company’s operating results for the first fiscal quarter of 2024, disclosing that the Company had missed its revenue guidance for the quarter. The company also revised its full year 2024 revenue guidance downward $20 million. The Company’s Chief Financial Officer (“CFO”) Joe Del Preto (“Del Preto”) stated the Company had “underestimated the magnitude of enterprise seasonality” and that the Company had also been “self-inducing sales execution headwinds.” During the earnings call held on the same day, the Company’s Present and incoming Chief Executive Officer (“CEO”), Ryan Barretto (“Barretto”) disclosed that the Company “made several important strategic decisions heading into Q1” which the Company “thought [it] could manage [] without disruption, but they collectively set us back.” Barretto stated these decisions “happened in Q4 and the execution of it happened in Q1.” Barretto further disclosed the Company’s shift in business had “changed materially” and “affect[ed] revenue recognition and planning” which would now be “heavily weighted to traditional enterprise buying cycles.” Justyn Howard (“Howard”), the Company’s current CEO, also disclosed that the Company had to spend “energy and calorie” in the first quarter on “tactical decisions” including “spending time with the team on Tagger enablement.” Barretto explained further, stating “[f]rom a sales team perspective, the maturity of the sales team, we did a lot of enablement in Q1 across our entire customer-facing or to make sure that we are up to speed with all of the elements of influencer and our Tagger platform.”
On this news, Sprout Social’s stock price fell $19.33, or 40.1%, to close at $28.82 per share on May 3, 2024, on unusually heavy trading volume.
The court-appointed lead plaintiff is the investor with the largest financial interest in the relief sought by the class who is adequate and typical of class members who directs and oversees the litigation on behalf of the putative class. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. Your ability to share in any recovery is not affected by the decision to serve as a lead plaintiff or not.
Faruqi & Faruqi, LLP also encourages anyone with information regarding Sprout Social’s conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
To learn more about the Sprout Social class action, go to www.faruqilaw.com/SPT or call Faruqi & Faruqi partner Josh Wilson directly at 877-247-4292 or 212-983-9330 (Ext. 1310).
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