Domo, Inc. (DOMO) Accused of Misleading Investors in IPO
According to the class action complaint against the company for alleged violations of the Securities Act of 1933, Domo held its initial public offering on June 29, 2019, offering 10,580,000 common shares at $21 per share for net proceeds of approximately $202.5 million. In its registration documents, Domo touted its expanded enterprise customer base as well as its focus on expanding its international footprint. However, in reality, Domo was experiencing weakness in its enterprise and international businesses and its billings growth had dramatically slowed. As a result, on September 5, 2019, Domo issued a press release that announced guidance for third quarter and full year fiscal 2019 that fell short of market expectations. Following these disappointing results, JMP Securities dropped its Domo target by $10.00 to $37.00, citing Domo’s weakness in enterprise and international businesses, and billings growth that was about half of what was expected. On this news, Domo’s stock price fell $9.44 per share to close at $15.77, an almost 25% drop from its IPO price.