NEW YORK, June 23, 2022 (GLOBE NEWSWIRE) -- The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed in the U.S. District Court for the Southern District of New York on behalf of those who acquired Riskified Ltd. (“Riskified” or the “Company”) (NYSE: RSKD) Class A ordinary shares in or traceable to the Company’s July 2021 initial public offering (the “IPO”). Investors have until July 1, 2022 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
Riskified operates a risk management platform that utilizes machine learning to protect its merchant-clients from fraud. Riskified’s proprietary machine learning platform purportedly identifies the individual behind each online interaction, helping Riskified’s customers, who consist of online merchants, eliminate risk and uncertainty from their businesses.
In July 2021, Riskified conducted its IPO, selling 20.125 million Class A shares at $21 per share.
On November 16, 2021, Riskified released its financial results for third quarter 2021, the period during which the IPO was conducted. The Company reported that revenue growth declined to 26% year-over-year, compared to 55% and 47% revenue growth in previous quarters. The Company’s gross profit margins had also declined while its cost of revenue increased to $28.3 million – 30% above the Company’s cost of revenue for the first and second quarters of 2021. The Company reassured investors that the results were “expected” and “definitely aligned” to expectations.
Then, on February 23, 2022, Riskified released its fourth quarter and full year 2021 financial results, reporting a continued decline in revenue growth and increase in cost of revenue. Additionally, the Company stated that its expected gross margin for 2022 would be only “at or above 51%.”
Following this news, Riskified Class A shares traded below $6 per share, more than 70% below the IPO price.
The lawsuit alleges that, throughout the Class Period, the Registration Statement made inaccurate statements of material fact because they failed to disclose the following adverse facts that existed at the time of the IPO: (i) as Riskified expanded its user base, the quality of Riskified’s machine learning platform had deteriorated (rather than improved as represented in the Registration Statement), because of, among other things, inaccuracies in the algorithms associated with onboarding new merchants and entering new geographies and industries; (ii) Riskified had expanded its customer base into industries with relatively high rates of fraud – including partnerships with cryptocurrency and remittance business – in which Riskified had limited experience and that this expansion has negatively impacted the effectiveness of Riskified’s machine learning platform; (iii) as a result, Riskified was suffering from materially higher chargebacks and cost of revenue and depressed gross profits and gross profit margins during its third fiscal quarter of 2021; and (iv) thus, the Registration Statement's representations regarding Riskified’s historical financial and operational metrics and purported market opportunities did not accurately reflect the actual business, operations, and financial results and trajectory of Riskified prior to and at the time of the IPO, and were materially false and misleading, and lacked a factual basis.
If you purchased or otherwise acquired Riskified securities, have information, or would like to learn more about these claims, please contact Thomas W. Elrod of Kirby McInerney LLP by email at email@example.com, or by filling out this contact form, to discuss your rights or interests with respect to these matters without any cost to you.
Kirby McInerney LLP is a New York-based plaintiffs’ law firm concentrating in securities, antitrust, whistleblower, and consumer litigation. The firm’s efforts on behalf of shareholders in securities litigation have resulted in recoveries totaling billions of dollars. Additional information about the firm can be found at Kirby McInerney LLP’s website: http://www.kmllp.com.
This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and ethical rules.