New York, New York--(Newsfile Corp. - July 16, 2024) - Pomerantz LLP announces that a class action lawsuit has been filed against Direct Digital Holdings, Inc. ("Direct Digital" or the "Company") (NASDAQ: DRCT) and certain officers. The class action, filed in the United States District Court for the Southern District of Texas, Houston Division, and docketed under 24-cv-02567, is on behalf of all those who purchased, or otherwise acquired, Direct Digital common stock during the period from April 17, 2023 through March 25, 2024, inclusive (the "Class Period"), who were damaged thereby (the "Class"). This action is brought on behalf of the Class for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. §§ 78j(b) and 78t(a), and Rule 10b-5 promulgated thereunder by the U.S. Securities and Exchange Commission, 17 C.F.R. § 240.10 b-5.
If you are a shareholder who purchased, or otherwise acquired, Direct Digital common stock during the Class Period, you have until July 22, 2024 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Danielle Peyton at newaction@pomlaw.com or 646-581-9980 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
[Click here for information about joining the class action]
Direct Digital is an end-to-end, full-service programmatic advertising platform that provides advertising technology, data-driven campaign optimization, and other solutions to markets on both the buy- and sell-side of the digital advertising ecosystem.
The Complaint alleges that, throughout the Class Period, Defendants made false and/or misleading statements, as well as failed to disclose material facts, including that: (i) the Company's transition towards a "cookie-less" advertising environment was accelerated and would impact revenue in 2024; (ii) the Company's alternatives to third-party cookies, including planned investments in artificial intelligence and machine learning to build on first-party data sources, would not be viable alternatives to third-party cookies and similar tracking technologies; (iii) the Company did not have adequate solutions to address the impending phase out of third-party cookies by Google; and (iv) based on the foregoing, Defendants lacked a reasonable basis for their positive statements about the effectiveness of Direct Digital's platform and related financial results, growth, and prospects.
On December 11, 2023, White Diamond Research published a report (the "White Diamond Report") addressing Direct Digital. The White Diamond Report noted, inter alia, that Direct Digital "doesn't mention any patents and reports zero R&D expense for its technology", which "suggests that its tech isn't proprietary and isn't improving to keep up with the strong competition in the space"; as well as asserted, inter alia, that the Company "is practically broke, with a reported $5.5M in cash, accounts payable that almost doubled quarter over quarter to $45M, and a sizeable debt of $24M with a 15% interest rate."
On this news, the price of Direct Digital common stock declined by $1.39 per share, or 11.31%, from $12.29 per share on December 8, 2023 to close at $10.90 per share on December 11, 2023.
On March 26, 2024, Direct Digital announced that it missed revenue estimates for the fourth quarter of 2023, citing lower-than-anticipated demand, a delay in the release of Tier 1 publishers from beta testing, and proactive efforts by Direct Digital to accelerate its transition towards a "cookie-less" advertising platform. Defendant Mark Walker, Direct Digital's Chief Executive Officer, Co-Founder, and Chairman, also revealed that in the fourth quarter of 2023, it "became clearer" that cookie depreciation would begin in the first quarter of 2024 and that, "[a]s such, our team proactively began our transition off of cookies for media transactions."
On this news, the price of Direct Digital common stock declined by $10.47 per share, or approximately 39%, from $26.51 per share on March 26, 2024 to close at $16.04 per share on March 27, 2024.
Then, on April 2, 2024, Direct Digital disclosed that a material weakness had been "identified in [its] review of internal control over financial reporting as of December 31, 2023."
On this news, Direct Digital's stock price fell $1.49 per share, or 10.4%, from $14.31 per share on April 1, 2024 to close at $12.82 per share on April 2, 2024, further injuring investors.
Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered billions of dollars in damages awards on behalf of class members. See www.pomlaw.com.
Attorney advertising. Prior results do not guarantee similar outcomes.
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