Zynga investor’s class-action lawsuit is moving closer to settlement. A federal judge gave preliminary approval to the class action settlement that accuses the game maker of artificially inflating its stock price, says a report from the Court House News.
What’s this Zynga case about?
In 2012, the lead plaintiff in the case David Fee accused Zynga executives of shifting the company’s revenue losses from the first-quarter to the second-quarter of 2012, which pushed the stock up in the first-quarter.
Fee claimed that the executives did this as they were aware of the game makers deteriorating financial condition, and seized the opportunity to profit by selling hundreds of millions of dollars of Zynga’s stock.
When Zynga actually revealed its real financial status, the stock dropped 37% on the day, says the order from the U.S. Magistrate Judge Jacqueline Corley’s. The judge has given preliminary approval to a $23 million settlement fund from which the charges like taxes, attorneys’ fees, litigation costs and notice and claims-administration expenses will also be deducted.
100,000 claimants expected
The lawsuit covers Zynga shareholders, who bought the stock between Dec. 15, 2011 and the close of trading on Feb. 14, 2012. As per the order, each will get $0.15 per share provided all class members make claims.
In a telephone interview to the Court House News, Jeffrey Norton, the plaintiffs attorney, said that he expects 100,000 claimants. Norton, who was pleased with the settlement’s terms, said, “We feel confident that it will get final approval, and we think it’s a fantastic settlement for the class.”
In the ruling, the judge said the settlement “appears to be the product of serious, informed, non-collusive negotiation.” The final hearing for the case is scheduled for Jan. 28, 2016. There have been no comments from Zynga or their attorneys.
Zynga upgraded to Buy
Separately, Zacks have upgraded the game maker to a Buy from Hold, in a note issued on Monday. Zacks has a $2.75 price target on the stock. Overall, two analysts have a sell rating on Zynga, eleven consider it a hold, four see it as a buy while one has assigned it a strong buy rating. Presently, Zynga has a consensus price target of $3.31.
At 9.30 am EDT, Zynga stock was up 0.54% at $2.239. Year to date, the stock is down over 12% while in the last one-month, it is up over 4%.