Apple has been hit with a class action lawsuit over the recent drop in iPhone sales that the company reported last quarter. The suit claims that Apple knew of the decline in sales well before they announced first a warning then the actual financial back in February. The suit seeks compensation for the drop in Apple stock share prices that happened as a result.
Specifically, the suit was filed by the City of Roseville employees’ retirement fund, is aiming to recover damages on behalf of people who purchased Apple stock between November 2, 2018 and January 2, 2019. In the lawsuit, it claims that Apple was not forthcoming about the drop in demand for iPhones. This was, later cited by the Cupertino company, as a result of poor sales in China and the 2018 battery replacement program. Both resulted in lower than expected sales in Apple’s first financial quarter of this year. The suit goes on to accuse the company of hiding facts around production orders from supplies being cut. Finally, it claims that Apple’s decision to no longer report iPhone unit sales figures was a method that the company used to cause share prices to raise.
At issue is that when when Apple did announce that it would not make its revenue forecast for the quarter, stocks fell some $15 per share. The suit claims that Apple knew this well in advance and did not share this until essentially after the quarter had closed.
How successful the case will be against Apple is unclear. It is not uncommon for companies to announce revenue misses prior to announcing their actual quarterly numbers. Further, it is not uncommon for companies to withhold this information until the last possible moment in case an unforeseen sales boom happens. We know now that did not happen in the case of the iPhone but from Apple’s perspective, there is no reason to announce something that may or may not correct itself prior to the end of quarter.
All that said, the unexpected announcement caught many investors and fans of the company off guard and rumblings of investor suits have been active since February when the numbers were actually released.