(CN) – Shareholders claim in a class action that in the lead-up to its initial public offering, Uber Technologies Inc. failed to warn investors about “rapidly increasing subsidies for customer rides and meals in a bid for market share” while “at the same time, cutting (or planning to cut) costs in key areas that undermined Uber’s central growth opportunities.”
The San Francisco-based ride sharing company entered the New York Stock Exchange by offering 180 million shares at $45 per share, raising $8 billion in net proceeds in May 2019. But the lawsuit alleges the company’s registration statement filed with the Securities Exchange Commission omitted crucial information. Uber shares began to drop the first day the company made its debut on the NYSE, opening at $42 per share, and continued to plummet to as low as $28.31 per share, and now hover below $27.
Lead plaintiffs Joseph Cianci and Johnny Ramey filed the complaint in California Superior Court against the company’s executives, board of directors, and 29 separate underwriters. They claim the underwriters are also liable for the misleading statements by allegedly failing to conduct due diligence before participating in the IPO. The underwriters collectively pocketed $106.2 million in fees, the lawsuit states.
Two weeks after the IPO, several senior officers announced their resignation from the company, and on July 29, 2019, Uber announced a layoff of 400 employees. The company announced a second mass layoff of 435 employees in September. Investors seek class action certification and damages and are represented by Scott Holleman and Marion C. Passmore of Brager Eagel & Squire in San Francisco.