Facts

Paul Hessong brought a federal securities class action against Pinterest, Inc.; Ben Silbermann, the company's co-founder, president, and chief executive officer; and Todd Morgenfeld, the company's chief financial officer and head of business operations. The class consisted of all persons who purchased or otherwise acquired common shares of Pinterest stock during the class period.

PLAINTIFF'S CONTENTIONS: Plaintiff asserted violations of Sections 10(b) and 20(a) of the Securities Exchange Act and Rule 10b-5. Plaintiff contended that throughout the class period, defendants repeatedly assured the market that Pinterest was successfully expanding its domestic user base and that there existed a significant addressable market of United States users that served as a catalyst for its online advertising revenue and thereby, for the financial well-being of the company. Unbeknownst to investors, however, the domestic market was quickly becoming saturated, leaving little room for future expansion or growth of domestic users. This negative trend, which threated to impact Pinterest's current and future financial results, was known to defendants throughout the class period, yet undisclosed to the investing public. Therefore, throughout the class period, defendants made materially false and misleading statements, and failed to disclose material adverse facts about the company's business, operations, and financial health. Specifically, defendants made false and/or misleading statements and failed to disclose to investors that the company's addressable market in the U.S. was reaching its maximum capacity; which significantly decelerated Pinterest's future ability to monetize on U.S. average revenue per user; Pinterest was at an increased risk of losing advertising revenue; and as a result, defendants' public statements were materially false and misleading at all relevant times or lacked a reasonable basis and omitted material facts.

DEFENDANTS' CONTENTIONS: Defendants denied all contentions and argued that plaintiff failed to meet the heightened pleading standards imposed under the Private Securities Litigation Reform Act for both falsity and scienter.

Result

The court granted the defendants' motion to dismiss.