A possibility, yes, but not one I am overly concerned about for a few reasons:
"Stock-drop lawsuits" typically have little actual merit and the law firm behind them are the bottom feeders of the industry - think of them as the ambulance chasers of business litigation. Just look at the most recent customer reviews of "Levi & Korsinsky, LLP", one of the firms filing a class action suit against Perion: "I worked with these corrupt people and wasted all of my money". These law firms tend to make money off their clients regardless if the case has merit or not so their incentive is not to pursue quality but quantity.
Even if an enterprising law firm gets class certified (no easy feat) they still need to prove a bunch of things to win a securities fraud case (stock-drop cases are securities-fraud cases) including, 1) that the company made false statements, 2) that those false statements were material, and 3) that you relied on them. This can be hard to do, and is why ~50% of these cases are dismissed at the earliest available procedural stage (source at end). Perion's relationship with Bing deteriorating, and management subsequent communication, does not stink of fraud to me.
Lastly, these cases tend to get settled and the $ figure is lower than you would think. Fellow Israeli company Nano-X, which is a similar size to Perion, comes to mind. Their CEO did commit fraud, by lying about how much it costs to produce their products, and the settlement amount was only $1.1 million. Even a settlement amount 10x that would be relatively insignificant to Perion's $480 million cash pile.
Take this all with a grain of salt bc I am no legal expert and haven't dug into the specifics of any case against Perion. I do know from prior experience that little comes from these cases unless there was actual fraud going on (think making CLEARLY FALSE statements to mislead investors). This is an important risk to flag but one that I think many investors over inflate, and in this case I would throw in the the bucket of being immaterial.
You are not accounting for the multiple lawsuits pending from investors against the company, which could very well damage the cash on bs
A possibility, yes, but not one I am overly concerned about for a few reasons:
"Stock-drop lawsuits" typically have little actual merit and the law firm behind them are the bottom feeders of the industry - think of them as the ambulance chasers of business litigation. Just look at the most recent customer reviews of "Levi & Korsinsky, LLP", one of the firms filing a class action suit against Perion: "I worked with these corrupt people and wasted all of my money". These law firms tend to make money off their clients regardless if the case has merit or not so their incentive is not to pursue quality but quantity.
Even if an enterprising law firm gets class certified (no easy feat) they still need to prove a bunch of things to win a securities fraud case (stock-drop cases are securities-fraud cases) including, 1) that the company made false statements, 2) that those false statements were material, and 3) that you relied on them. This can be hard to do, and is why ~50% of these cases are dismissed at the earliest available procedural stage (source at end). Perion's relationship with Bing deteriorating, and management subsequent communication, does not stink of fraud to me.
Lastly, these cases tend to get settled and the $ figure is lower than you would think. Fellow Israeli company Nano-X, which is a similar size to Perion, comes to mind. Their CEO did commit fraud, by lying about how much it costs to produce their products, and the settlement amount was only $1.1 million. Even a settlement amount 10x that would be relatively insignificant to Perion's $480 million cash pile.
Take this all with a grain of salt bc I am no legal expert and haven't dug into the specifics of any case against Perion. I do know from prior experience that little comes from these cases unless there was actual fraud going on (think making CLEARLY FALSE statements to mislead investors). This is an important risk to flag but one that I think many investors over inflate, and in this case I would throw in the the bucket of being immaterial.
https://moka.law/news/is-everything-really-securities-fraud/