DigitalOcean Holdings, Inc.
|Company Name||DigitalOcean Holdings, Inc.|
|Class Period||February 16, 2023 to August 25, 2023|
|Lead Plaintiff Motion Deadline||November 13, 2023|
On August 3, 2023, DigitalOcean disclosed that it “identified certain errors within the unaudited condensed consolidated financial statements for the quarter ended March 31, 2023 as included in our Quarterly Report on Form 10-Q for the three months ended March 31, 2023 filed on May 9, 2023” related to the Company’s accounting for income tax expense. The Company claimed the errors resulted in an $18 million overstatement of the Company’s income tax expense. The Company further disclosed that the material weakness in its internal controls that caused the error traced back to, at latest, December 31, 2022, rendering its Annual Report for the previous year inaccurate as well. On this news, DigitalOcean’s stock price fell $11.57, or 24.8%, to close at $35.11 per share on August 4, 2023, thereby injuring investors.
Then, on August 24, 2023, DigitalOcean announced that its CEO was stepping down. On this news, DigitalOcean’s stock price fell $2.65, or 8.4%, to close at $28.86 per share on August 25, 2023, thereby injuring investors further.
The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (1) Defendants lacked the skills and experience to assess complicated tax matters and therefore did not design or maintain effective controls over the Company’s accounting for income taxes; and (2) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.
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