GreenSky, Inc. (GSKY) Accused of Failing to Disclose Company's Shift in Merchant Business Mix

According to the complaint, GreenSky held its IPO on May 29, 2018, and generated over $1 billion in gross proceeds based on misleading offering documents. As a result of moving away from its solar power business and into the elective healthcare market, GreenSky's transaction-fee revenue significantly declined and will continue to decline absent a change in focus back to its solar power business. However, the offering documents touted GreenSky's growth and financial performance and did not disclose that GreenSky was transitioning to a less profitable market. Less than three months later, GreenSky reported dismal financial results, citing its merchant business mix shift and consequently drastically reduced transaction-fee rate. When GreenSky again reported disappointing results and lowered its guidance, GreenSky's stock fell to $9.28 per share on November 6, 2018—nearly 60% below the company's $23.00 IPO price—and has yet to recover.

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