Ubiquiti Networks, Inc. Accused of Overstating Its Financial Outlook

According to the complaint, throughout the class period, Ubiquiti Networks, Inc. (Nasdaq: UBNT) reported "record" financial results and outsized financial guidance as a result of "strong demand for new product offerings." Ubiquiti further touted its unconventional sales force entitled the "Ubiquiti Community," which had allowed and would continue to allow Ubiquiti to grow in perpetuity while "avoid sales force." As these statements artificially inflated the company's stock, the company's Chief Executive Officer, Chairman and founder, Robert J. Pera, sold one million shares of Ubiquiti common stock for gross proceeds of $61.25 million.

On September 18, 2017, Citron Research published a report detailing a series of "alarming red flags" indicating that Ubiquiti engaged in corporate fraud and misrepresented the size of the Ubiquiti Community and levels of accounts receivable. In response, Ubiquiti filed a Form 8-K increasing the company's financial guidance for 1Q18 and announcing $100 million in newly authorized share repurchases. The Form 8-K also announced that Pera would host Ubiquiti's first Investor Update on September 26, 2017. The complaint contends that the Form 8-K, the statements at the Investor Update, and subsequent press releases and earnings calls for 1Q18 and 2Q18 caused investors and analysts to ignore the Citron Report and Ubiquiti's stock price to increase to more than $82 per share. The stock then plummeted more than 25% on February 20, 2018, when Ubiquiti announced that the Securities and Exchange Commission issued subpoenas requesting information about the company's accounting practices, and financial information, among other things.

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