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 DigitalOcean Holdings, Inc. (“DigitalOcean” or the “Company”) (NYSE: DOCN) securities during the period from February 16, 2023 through August 25, 2023 (the “Class Period”). Investors have until November 13, 2023 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
On August 3, 2023, DigitalOcean announced that it had made errors on previously issued financial statements for the period ended June 30, 2023. The Company revealed that it would file an amendment to its Q1 2023 10-Q, which would “also include disclosure of an identified material weakness and that our disclosure controls and procedures were not effective as of March 31, 2023” and December 31, 2022. On this news, the price of DigitalOcean shares declined by $11.57 per share, or approximately 24.8%, from $46.68 per share to close at $35.11 on August 4, 2023.
On August 9, 2023, DigitalOcean announced that it would be unable to file its quarterly report for the fiscal quarter ended June 30, 2023 due to “circumstances previously disclosed” in the August 3, 2023 report. On the same day, DigitalOcean filed an amendment to its annual report for the year ended December 31, 2022. The amendment specifically stated there were errors in its income tax expense accounting relating to the calculation of certain capitalized research or experimental expenditures, which impacted DigitalOcean’s income tax provision. As a result of the error, DigitalOcean announced that “accrued taxes as of March 31, 2023 were overstated and the income tax expense for the three months ended March 31, 2023 was overstated by approximately $15 million.”
On August 24, 2023, DigitalOcean announced that its board of directors was implementing a leadership succession plan to identify the Company’s next chief executive officer, replacing Yancey Spruill after a successor is appointed. On this news, the price of DigitalOcean shares declined by $2.65 per share, or approximately 8.4%, from $31.51 per share to close at $28.86 on August 25, 2023.
The lawsuit alleges that, throughout the Class Period, Defendants made false and/or misleading statements, as well as failed to disclose that: (i) Defendants lacked the skills and experience to assess complicated tax matters and therefore did not design or maintain effective controls over the Company’s accounting for income taxes; and (ii) as a result of the foregoing, Defendants’ financial statements during the Class Period were inaccurate and materially misleading.
If you purchased or otherwise acquired DigitalOcean securities, have information, or would like to learn more about this investigation, please contact Thomas W. Elrod of Kirby McInerney LLP by email at investigations@kmllp.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: https://www.kmllp.com.
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