Twitter agrees to settle shareholders’ lawsuit for $809.5 million

Twitter has proposed a settlement for a 2016 lawsuit alleging that the company shared misleading data about the platform’s growth with investors. Twitter wants to settle for an amount of 809.5 million dollars.

Twitter said in a press release that it plans to pay out the proposed settlement with cash available to the company. The California court has yet to approve the settlement. If that happens, Twitter expects it to pay the $809.5 million in the fourth quarter of this year.

The lawsuit dates back to 2016 and was filed by a Twitter shareholder. He stated that Twitter co-founder Jack Dorsey and other top executives shared misleading data with investors, Variety writes. That data made Twitter user growth appear better than it actually was, according to the indictment. The Twitter executives also allegedly sold personal insider shares for more than $100 million in profit during that period, shareholders claimed.

The indictment alleges, among other things, that Twitter allegedly misled investors about the growth prospects of the company at the end of 2014, The Verge also writes. The company would then have made ‘unrealistic’ growth projections; the company then stated that the number of active users would double to 550 million in the “mid-term” term, with a target of more than a billion active users in the long term. There was no basis for that forecast, according to the indictment, Bloomberg reports.

Twitter would then have tried to hide the actual user engagement from investors, because it was seen as a major growth factor for the number of active users. Among other things, the platform is said to have stopped reporting timeline views, one of the primary measures of engagement. That would have made it harder for analysts and investors to monitor the platform’s growth. Twitter would have stated at the time that those numbers had become irrelevant. The company also sent messages to inactive users, according to the indictment, encouraging them to log in to the platform in order to increase the number of active users.

The settlement would settle all claims against Twitter. Twitter emphasizes that the settlement is not an admission of guilt. “The proposed settlement resolves all claims against Twitter and the other defendants without any admission, concession or finding of any fault, liability or misconduct by Twitter or any defendant,” the company said. “Twitter and the individual defendants continue to deny misconduct or other improper actions.”