Cerence Inc. (CRNC) Misled the Investing Public Regarding its Business, Operations, and Prospects
A shareholder filed a class action on behalf of persons and entities that purchased Cerence Inc. (NASDAQ: CRNC) common stock between February 8, 2021 and February 4, 2022, for violations of the Securities Exchange Act of 1934. Cerence builds artificial intelligence-powered virtual assistants primarily for the automotive market.
According to the complaint, during the class period, defendants failed to disclose that: (1) the global semiconductor shortage had a materially negative impact on demand for Cerence’s software licenses; and (2) defendants masked the impact of the semiconductor shortage on demand for the Company’s software licenses by pulling forward sales. As a result, defendants’ statements about Cerence’s business, operations, and prospects were false and misleading.
The truth was revealed during a series of disclosures. First, on November 22, 2021, the Company released its results for fiscal fourth quarter and full year 2021, and provided guidance for fiscal 2022 that was below analysts’ expectations. The Company’s CFO explained the Company’s conservative approach “due to the ongoing semiconductor shortage…” However, Cerence stood by its 2024 outlook. Over two days, the stock fell from $104.06 on November 19, 2021 to $78.27 per share on November 22, 2021.
Then, on February 7, 2022, Cerence announced its financial results for the fiscal first quarter of 2022, providing “a 9% decrease at the midpoint compared to the initial FY22 guidance provided on November 22, 2021, and a 3% decrease at the mid-point compared to last year’s actual revenue of $387 million.” Further, the Company announced it was “withdrawing the fiscal 24 target model previously provided…” In response, the price of Cerence stock dropped more than 30%, from a closing price of $63.58 on February 4, 2022, to a closing price of $43.61 per share on February 7, 2022.
Next Steps: If you acquired shares of Cerence Inc. (CRNC) between February 8, 2021 and February 4, 2022, you have until April 26, 2022, to ask the court to appoint you lead plaintiff for the class. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. You do not have to participate in the case to be eligible for a recovery.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.