Pomerantz Appointed Co-Lead Counsel in Cheetah Mobile Securities Litigation
On January 12, 2021, U.S. District Judge Michael W. Fitzgerald of the Central District of California appointed Pomerantz LLP as Co-Lead Counsel on behalf of Lead Plaintiffs Guan Wei Mao and Jun Yu in In re Cheetah Mobile, Inc. Sec. Litig., 20-cv-5696 (C.D. Cal.), a securities litigation being pursued on behalf of a class of defrauded investors concerning allegations that Cheetah Mobile, Inc. (“Cheetah Mobile” or the “Company”) failed to disclose that some of the Company’s apps were not in compliance with terms and policies of Google, a channel through which Cheetah generated 22.6% of its total revenues.
Cheetah Mobile is a mobile Internet company that offers mobile utility products (such as Clean Master and Cheetah Keyboard), casual games (such as Piano Tiles 2, Bricks n Balls), and live streaming products (such as LiveMe). The Company also provides its advertising customers, which include direct advertisers and mobile advertising networks through which advertisements are place, with direct access to highly targeted mobile users and global promotional channels.
The complaint alleges that, between March 25, 2019 and February 20, 2020, the defendants failed to disclose to investors that: (i) certain of Cheetah Mobile’s apps were not compliant with the terms of its agreements with Google; (ii) as a result, there was a reasonable likelihood that Google would terminate its advertising contracts with the Company; (iii) as a result of the foregoing, the Company’s ability to attract new users would be adversely impacted; and (iv) as a result, the Company’s revenue was reasonably likely to decline.
On February 21, 2020, before the market opened, the Company disclosed that its Google Play Store, Google AdMob, and Google AdManager accounts were disabled on February 20, 2020 “because some of the Company’s apps had not been compliant with Google policies, resulting in certain invalid traffic.”
On this news, the Company’s share price fell $0.61 per share, or nearly 17%, to close at $2.99 per share on February 21, 2020.