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Eventbrite calls for investor class action lawsuit to be dismissed
By Chris Cooke | Published on Friday 13 December 2019
Eventbrite has told a Californian court that it should throw out a proposed class action lawsuit in relation to its 2018 initial public offering, arguing that plaintiffs have failed to identify any specific false or misleading statements made by the company.
Shares in the ticketing firm took a bashing in both March and May this year following official updates regarding revenues and revenue projects – which were lower than expected – and also ongoing challenges around the integration of Ticketfly, the rival ticketing business that it bought in 2017.
Some Eventbrite investors argued that the admission that the Ticketfly integration was proving rather challenging was contrary to what the company had said ahead of its September 2018 IPO. Which meant, they reckoned, that the ticketing firm had misled potential investors about the business.
Seeking to capitalise on those arguments, various law firms set about putting together a class action lawsuit that could involve any investors who bought Eventbrite shares between the IPO and the financial statement this March. But Eventbrite denies that there is any valid claim against it under the American laws that regulate the sale and exchange of stocks and shares.
In a legal filing made with the court this week, Eventbrite states: “Plaintiffs claim that Eventbrite … misled investors about its September 2017 acquisition of Ticketfly. But the complaint does not allege facts suggesting that Eventbrite made any false or misleading statements of material fact”.
Not only that, but Eventbrite told potential investors – it says – that its strategy of growing through acquisition – and by integrating the customer base and tech of acquired companies – presented challenges.
“Eventbrite noted that this integration and migration process typically takes between twelve and 24 months, and warned investors about many risks inherent in the integration and migration process”, the firm’s lawsuit adds. “Among other things, that Eventbrite may have difficulty assimilating the acquired technology, may fail to timely integrate acquired companies, and may experience customer loss during this process”.
On the Ticketfly integration specifically, it insists that its pre-IPO documents “did not say anything about when Eventbrite expected to complete the integration and migration process for Ticketfly, or which Ticketfly features Eventbrite planned to integrate onto its own platform, much less that it would be successful in doing so. Nor did [those documents] promise that all or even a specific percentage of Ticketfly’s customers [called ‘creators’] would eventually migrate to Eventbrite’s platform”.
“Quite the opposite”, it goes on, “Eventbrite expressly disclosed that its ‘ability to attract and retain creators will be harmed’ if the company is ‘not able to provide easy-to-use solutions required by creators’; that ‘creators of the acquired companies or businesses may not migrate to our platform’; and that Eventbrite ‘previously experienced customer loss in the process of integrating and migrating acquired companies for a variety of reasons’. Eventbrite’s public statements after the IPO were entirely consistent with these disclosures”.
Elsewhere in its submission Eventbrite takes issue with the specific past statements that aggrieved investors have cited in their legal claim. Those statements were vague, or obviously opinion, or not the sort of thing any serious investor would base a decision on, it argues, especially in the context of the warnings contained in Eventbrite’s official IPO documentation.
With all this in mind, the ticketing outfit tells the court that the proposed investor class action “should be dismissed with prejudice”. We now await to see how the aggrieved investors, and the court, respond.
