TaskUs, Inc. (TASK) Misstated its Business Prospects
A shareholder filed a class action on behalf of persons and entities that purchased or acquired TaskUs, Inc. (NASDAQ: TASK) securities between June 11, 2021 and January 19, 2022, for violations of the Securities Exchange Act of 1934. TaskUs provides outsourcing services for companies worldwide.
According to the complaint, TaskUs held its initial public offering (“IPO”) on June 10, 2021, offerings its shares at $23 per share. In the offering documents for the IPO, TaskUs claimed to have “industry-leading growth and profitability” and insisted that its “market opportunity is over $100 billion.” During the class period, TaskUs continued to assert that its “market opportunity … is simply massive,” and the “market across the specialized services we deliver is over $100 billion, and demand for some of these services is growing up to 50% annually. So we are just getting started.”
These statements, however, were materially false and misleading. Actually, TaskUs was experiencing severe financial strain and business challenges, especially with its most important customer, Facebook. Further, defendants’ representations were based on outdated market data and improperly recognized revenue from certain key contracts. Finally, defendants outstated the size of TaskUs’ workforce and understated employee retention and attrition rates.
On January 20, 2022, Spruce Point Capital Management, LLC issued a short-seller report on TaskUs. In the report, Spruce Point states, “After conducting a forensic financial and accounting review, Spruce Point believes shares of TaskUs, Inc. (Nasdaq: TASK) … has a pattern of exaggerated and inflated business claims, including revenue, and is covering-up financial strain with reduced disclosures, cherry-picked market data, and non-standard key performance metrics.” The report notes the shortcomings of its CEO, CFO, and Principal Accounting Officer, and issues with its financial assumptions and presentation methods, among other things. On this news, TaskUs’s stock fell $5.46, or over 15%, to close at $30.13 per share on January 20, 2022, injuring investors.
Next Steps: If you purchased shares of TaskUs, Inc. (TASK) between June 11, 2021 and January 19, 2022, you have until April 25, 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.