The Law Offices of Frank R. Cruz announces that it has filed a class action lawsuit in the United States District Court for the Central District of California, captioned Brookman v. Webtoon Entertainment Inc., et al., Case No. 2:24-cv-07553, on behalf of persons and entities that purchased or otherwise acquired WEBTOON Entertainment Inc. (“Webtoon” or the “Company”) (NASDAQ: WBTN) common stock pursuant and/or traceable to the registration statement and prospectus (collectively, the “Registration Statement”) issued in connection with the Company’s June 2024 initial public offering (“IPO” or the “Offering”). Plaintiff pursues claims under the Securities Act of 1933 (the “Securities Act”).
Investors are hereby notified that they have until 60 days from this notice to move the Court to serve as lead plaintiff in this action.
If you are a shareholder who suffered a loss, click here to participate.
On June 27, 2024, Webtoon conducted its IPO, selling 16,371,549 shares of common stock at $21.00 per share.
On August 8, 2024, after the market closed, Webtoon announced its financial results for second quarter 2024, which had ended just days after the IPO closed. The Company reported revenue of $321 million, which represented total revenue growth of only 0.1%. The Company further revealed advertising revenue declined 3.6% and IP Adaptations revenue declined 3.7%. The Company revealed its revenue and revenue growth had been “offset by the Company’s significant exposure to weaker foreign currencies.” Webtoon also reported a quarterly net loss of $76.6 million, or 70 cents.
On this news, Webtoon’s stock fell $7.88 or 38.2%, to close at $12.75 per share on August 9, 2024, on unusually heavy trading volume. By the commencement of this action, Webtoon stock has traded as low as $12.45 per share, a more than 40% decline from the $21.00 per share IPO price.
The complaint filed in this class action alleges that the Registration Statement made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that the Company experienced a deceleration in advertising revenue growth; (2) that the Company experienced a deceleration in IP adaptations revenue; (3) that the Company experienced exposure to weaker foreign currencies which offset revenue growth; (4) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
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If you purchased Webtoon common stock during the Class Period, you may move the Court no later than 60 days from this notice to ask the Court to appoint you as lead plaintiff. To be a member of the Class you need not take any action at this time; you may retain counsel of your choice or take no action and remain an absent member of the Class. If you purchased Webtoon common stock, have information or would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Frank R. Cruz, of The Law Offices of Frank R. Cruz, 2121 Avenue of the Stars, Suite 800, Los Angeles, California 90067 at 310-914-5007, by email to info@frankcruzlaw.com, or visit our website at www.frankcruzlaw.com. If you inquire by email please include your mailing address, telephone number, and number of shares purchased.
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