The well-known technology maker GoPro is now facing a securities class action lawsuit over problems stemming from a drone released late last year. To learn more this case, visit Battea’s GoPro case summary.
GoPro’s Karma drone, the release of which was delayed several times over a period of months, came out late last year but was quickly recalled. The suit alleges that the company and certain of its officers made materially false or misleading statements about the company’s business and policies. Specifically, it notes that the Karma drones were at risk of losing power mid-flight and falling out of the sky, and that the company overstated how effectively they could be operated. The recall – which was costly for the company – went into effect about two weeks after Karma was released to the general public, and caused the company to revise guidance for 2016 downward.
The suit has a class period of Sept. 19, 2016, to Nov. 4, 2016.
What happened?
Though Karma was only released toward the end of October, the company issued the recall in early November, adding the product would not be available again “until we resolve a performance issue related to loss of power during operation,” GoPro said. It noted that the power failures were only occurring “in a small number of cases” and that it was working closely with both the U.S. Consumer Product Safety Commission and Federal Aviation Administration to deal with the issue. It further noted its Karma Grip – a portable camera holder packaged with the drones – was not affected by the recall. However, the drone, the camera holder, and the HERO5 Black camera that came packaged with it would all have to be returned under the recall, for a full refund.
The company said it would provide discounts for all Karma drones being returned, and that all use of all drones purchased should be discontinued immediately, and the devices returned even if they appeared to be operating correctly. Customers who also purchased GoPro Care or other accessories for the device would also receive refunds for those purchases as well.
The affect on stock prices
GoPro first announced the recall on Nov. 3, 2016, at which point the company’s stock stood at $11.94 per share. Within a week the price had fallen to just $10.21 per share and continued to slide through the end of the year. As of Dec. 30, the company’s stock was at just $8.71 per share, and has rebounded only slightly in the first several days of 2017.
Moreover, these stock prices are down from the highest points observed as recently as early October, when it was as high as $17.13 per share. The slide since then has been pronounced, with only a handful of upticks observed since then. Current prices are in line with the lowest levels observed at any point in 2016.
For more information on this case or other class action litigations, please contact Kevin Doyle, Senior Vice President, at 203-987-4949 or info@battea.com.