WILMINGTON, Del. (Legal Newsline) – Stockholders suing GoPro over troubles it had rolling out a drone product have lost their lawsuit in Delaware.
Chancellor Joseph Slights III granted the company’s motion to dismiss two consolidated lawsuits in the Delaware Chancery Court, ruling the plantiffs have failed to plead a majority of the company’s Board of Directors at the time of a stock-price drop faces a likelihood of personal liability.
“Although Plaintiffs throw everything against the wall, nothing sticks,” Slights wrote. “(T)he complaint pleads no facts that would allow a reasonable inference a majority of the Demand Board knew GoPro was misleading investors with any of its public statements during 2016.”
GoPro in 2016 planned a drone that would house its cameras, with expectations it would be available for sale well before the holiday season.
Launch was delayed, however, until the fall, and the company faced other problems like more product returns than it expected and inventory shortages. A battery defect was found in the drone, called Karma, and ultimately the company recalled the product.
Through 2016, GoPro did not adjust its earnings estimates. The company generated $1.185 billion in revenue in 2016, short of the company’s expected $1.25-$1.3 billion estimate, leading to a 12% drop in its stock price.
Lawsuits alleged the company knew the problems that were coming but did not inform stockholders. Slights took no stock in YouTube videos showing a battery defect that plaintiffs called red flags.
“Even if they were red flags, the board met to discuss ‘proposed recall plans’ just 11 days after the first video was posted,” Slights wrote.
From Legal Newsline: Reach editor John O’Brien at john.obrien@therecordinc.com.