NEW YORK--(BUSINESS WIRE)--Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, announces that a class action lawsuit has been filed in the United States District Court for the Southern District of New York on behalf of investors that purchased ServiceMaster Global Holdings, Inc. (NYSE: SERV) common stock between February 26, 2019 and November 4, 2019 (the “Class Period”). Investors have until June 9, 2020 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
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On October 22, 2019, ServiceMaster announced disappointing preliminary financial results for the third quarter of 2019. The company stated that it missed revenue and earnings estimates and issued downward adjusted EBITDA guidance. The press release attributed the disappointing results to “termite damage claims arising primarily from Formosan termite activity,” primarily in Mobile, Alabama. The Company further stated that this had been a known issue, having taken mitigating measures “starting in 2018.” Finally, the Company announced the sudden departure of Matthew J. Stevenson in his role as President of Terminix Residential.
On this news the price of ServiceMaster common stock fell $11.44 per share or 20%, closing at $44.70 per share on October 22, 2019.
Then, on November 5, 2019, ServiceMaster released its third quarter 2019 financial results. In this press release discussing the “challenging quarter,” the Company revealed that it had been impacted by certain “legacy risks,” including “termite damage claims.” That same day, defendants held an earnings call with analysts and investors to discuss ServiceMaster’s third quarter 2019 financial results. On the call, defendants informed the market that the increase in termite litigation—which had occurred “[i]n the past few years”—had impacted termite revenue and these issues would continue throughout 2020.
On this news, the price of ServiceMaster shares fell $1.42 per share, or 3.5%, to close at $39.15 per share on November 5, 2019. As the market continued to digest the disappointing news, ServiceMaster shares further declined by $3.41, or 9%, to close at $35.74 per share on November 6, 2019.
All told, following the November 5, 2019 disclosure, ServiceMaster stock suffered a total decline of $4.83 per share from its November 4, 2019 closing price.
The complaint, filed on April 10, 2020, alleges that during the Class Period defendants repeatedly assured the market that ServiceMaster was successfully executing upon initiatives to improve the performance in the Terminix segment. In addition, defendants stated that Terminix would reach a positive “inflection point” and was “definitely the driver” for positive trends expected in the second half of 2019. Unbeknownst to investors, however, in the past several years the Terminix segment had experienced an adverse trend of costly termite litigation, primarily related to Formosan termite activity. This negative trend, which would ultimately impact ServiceMaster’s current and future financial results, was known to defendants throughout the Class Period, as by their own later admission they had been taking mitigating measures since 2018.
If you purchased ServiceMaster common stock during the Class Period, are a long-term stockholder, have information, 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 Melissa Fortunato or Marion Passmore by email at firstname.lastname@example.org, telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.
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