Robbins LLP: Wayfair Inc. (W) Misled Shareholders According to a Recently Filed Class Action
Robbins LLP announces that a securities fraud class action complaint was filed in the U.S. District Court for the Southern District of New York. The complaint alleges that officers and directors of Wayfair Inc. (NYSE: W) violated the Securities Exchange Act of 1934 between October 2, 2014 and August 31, 2015, by making materially false and misleading statements about Wayfair’s competitors. Wayfair engages in the e-commerce business in the United States. Relevant non-party Overstock.com Inc. (“Overstock”) also operates as an online retailer primarily in the United States.
Wayfair Fails to Mention its Biggest Competitor in its SEC Filings
According to the complaint, on October 2, 2014, shares of Wayfair began trading on the New York Stock Exchange following its initial public offering (“IPO”) of 11 million shares at $29 per share, raising $319 million. The registration statement used to conduct the IPO, as well as many of the company’s other SEC filings, stated that competition from several named online home goods retailers, including Amazon and eBay, was expected to increase. However, the complaint alleges that company officials failed to disclose Overstock as a competitor, and as a result, the company’s public statements were materially false and misleading.
On August 31, 2015, analyst firm Citron Research published a report on Wayfair, asserting that it failed to mention Overstock as a competitor in its SEC filings despite the similarities between the companies. The report noted that the only difference between the companies is that Overstock has better brand recognition and higher traffic. The report further pointed out that both companies focus on the sale of furniture and home goods, both have the same corporate strategies, and both operate warehouses in Cincinnati and distribution centers in Utah. The report claimed that Wayfair intentionally shunned the comparison because if it acknowledged Overstock as a competitor, Wayfair’s stock would not be worth more than $10 per share. On this news, Wayfair stock fell $4.92 per share, or over 11%, to close at $37.30 per share on August 31, 2015.
Wayfair Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.