SAN DIEGO--(BUSINESS WIRE)--Robbins Geller Rudman & Dowd LLP (https://www.rgrdlaw.com/cases-zendesk-class-action-lawsuit.html) today announced that a class action has been commenced on behalf of purchasers of Zendesk, Inc. (NYSE:ZEN) common stock during the period between February 6, 2019 and October 1, 2019 (the “Class Period”). This action was filed in the Northern District of California and is captioned Reidinger v. Zendesk, Inc., et al., No. 19-cv-06968.
The Private Securities Litigation Reform Act of 1995 permits any investor who purchased Zendesk common stock during the Class Period to seek appointment as lead plaintiff. A lead plaintiff acts on behalf of all other class members in directing the litigation. The lead plaintiff can select a law firm of its choice. An investor’s ability to share in any potential future recovery is not dependent upon serving as lead plaintiff. If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from today. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff’s counsel, Brian E. Cochran or Mary K. Blasy of Robbins Geller at 800/449-4900 or 619/231-1058, or via e-mail at firstname.lastname@example.org or email@example.com. You can view a copy of the complaint as filed at https://www.rgrdlaw.com/cases-zendesk-class-action-lawsuit.html.
The complaint charges Zendesk and certain of its officers and/or directors with violations of the Securities Exchange Act of 1934. Zendesk is a Software as a Service (“SaaS”) provider that purports to help clients better communicate with their customers through online customer chats and data analysis.
The complaint alleges that throughout the Class Period, defendants disseminated materially false and misleading statements to the investing public and failed to disclose adverse facts pertaining to the Company’s business, operations, and financial results. Specifically, the Company concealed material information and/or failed to disclose that: (a) Zendesk’s clients had been subject to data breaches dating back to 2016; (b) Zendesk was experiencing slowing demand for its SaaS offerings, particularly in Germany, the United Kingdom, and Australia, due in large part to political uncertainty and China trade issues there; and (c) as a result of the foregoing, Zendesk’s business metrics and financial prospects were not as strong as defendants had led the market to believe during the Class Period. As a result of this information being withheld from the market, the price of Zendesk common stock was artificially inflated to more than $93 per share during the Class Period. While Zendesk common stock was trading at these artificially inflated prices, certain of the Company’s officers and/or directors cashed in, selling approximately 409,000 of their personally held Zendesk shares, reaping more than $32.7 million in proceeds.
On July 30, 2019, Zendesk announced disappointing financial results for the second quarter of 2019. In addition, Zendesk disclosed that its sales growth in the Europe, Middle East, and Africa (“EMEA”) and Asia-Pacific (“APAC”) regions “didn’t quite live up to [defendants’] own expectations, and lagg[ed] other regions.” Zendesk blamed a mix of macro and operational issues that had been driving the weakness. With respect to fiscal 2019 guidance, the Company cautioned that it was “maintaining a prudent view on the year as [defendants] gain[ed] a better understanding of the dynamics, internal and external, in EMEA and APAC,” and thus expected ongoing revenue growth of just 30%. Following these disclosures, the price of Zendesk common stock declined precipitously, falling nearly $10 per share to close at $83.56 per share on July 31, 2019.
Prior to September 24, 2019, a third party alerted Zendesk to the fact that the personally identifiable data of its chat and support accounts had been breached. By September 24, 2019, the Company’s internal investigation had revealed that some 10,000 accounts opened before November 2016 had been breached. On October 2, 2019, Zendesk for the first time publicly disclosed the data breach, stating that the data breach only affected customers who had signed up prior to November 1, 2016. On news of the data breach, the price of Zendesk common stock fell another $2.90 per share to close at $69.81 per share on October 2, 2019.
Plaintiff seeks to recover damages on behalf of all purchasers of Zendesk common stock during the Class Period (the “Class”). The plaintiff is represented by Robbins Geller, which has extensive experience in prosecuting investor class actions including actions involving financial fraud.
Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities litigation. With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history. For six consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements. Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims. Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide. Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry. Please visit http://www.rgrdlaw.com for more information.