An investor of Millennial Media, Inc. (MM) has filed a federal securities fraud class action complaint in the U.S. District Court for the Southern District of New York. The complaint alleges that the company and certain of its officers and directors violated the Securities Exchange Act of 1934 between March 28, 2012 and May 7, 2014. Millennial Media is a digital advertising company that provides mobile advertising solutions to advertisers and developers in the United States and internationally.
Millennial Media Is Accused of Misrepresenting its Performance
According to the complaint, shares of Millennial Media fell multiple times, representing a total decline of 86.56% from the stock's class period high. Shares of Millennial Media initially declined $5.38 per share or over 37% to close at $8.95 per share on February 20, 2013, following a February 19, 2013 press release announcing lower than expected revenues for the fourth quarter 2012 and bleak revenue guidance for 2013. Following subsequent declines, shares of Millennial Media fell most recently on May 7, 2014, after the company announced: (i) revenue for the first quarter of 2014 was again below analysts' projections; (ii) dour revenue guidance; and (iii) the resignation of the company's Chief Financial Officer, Michael B. Avon. As a result, Millennial Media's stock declined $1.99 per share, or over 37% percent, to close at $3.36 per share on May 8, 2014.
The complaint further alleges that Millennial Media failed to disclose that: (i) its technological products were not fully functional when announced, leading to rushed products with poor performance; (ii) it had little ability to track and report end-user clicks, leading to over-billing and customer abandonment; and (iii) corporate acquisitions the company undertook did not offer the business synergies claimed but were utilized to fill holes in Millennial Media's capabilities and further presented integration challenges for the company.
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