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WBTN.US

id: 1337

Webtoon Entertainment ($WBTN) $10.05 Million Investor Settlement

The settlement terms have been submitted to the court for approval.

$10,050,000

Cash Settlement

C.D. California

Court

2:24-cv-07553

Case number

06/27/2024

Class period Start

09/05/2024

Class period End

Webtoon Entertainment has agreed to a proposed $10.05 million settlement to resolve investor claims that it misled the market about its revenue growth and financial health.

Outline:

Following its 2024 IPO, Webtoon touted its growth potential in advertising and IP adaptations. Investors say the company overstated its financial health and failed to disclose the full impact of foreign currency risks and declining revenue streams. On August 8, 2024, Webtoon reported Q2 2024 results showing revenue growth of just 0.1%, declines in key segments, and a $76.6 million net loss, and $WBTN fell 38.2% the next day. The case has now moved to a proposed $10.05 million settlement.

Timeline:
August 8, 2024: Webtoon announced Q2 2024 financial results, reporting total revenue growth of just 0.1%, a 3.6% decline in advertising revenue, a 3.7% decline in IP adaptations revenue, and a net loss of $76.6 million, which it attributed to foreign currency fluctuations in the Korean won and Japanese yen.
August 9, 2024: $WBTN fell 38.2% following the earnings release.
Background:

Webtoon Entertainment, the company behind the $WBTN webcomics and IP platform, went public in 2024. Following its IPO, the company touted its growth potential in advertising and IP adaptations as key drivers of future revenue.

Investors say that picture was overstated. According to the case, Webtoon overstated its financial health and future revenue potential and failed to disclose the full impact of foreign currency risks and declining revenue streams on its business.

On August 8, 2024, Webtoon reported Q2 2024 results showing total revenue growth of only 0.1%, a 3.6% decline in advertising revenue, a 3.7% decline in IP adaptations revenue, and a net loss of $76.6 million. 

On the earnings call, company leadership acknowledged challenges in maintaining revenue growth, pointing to weaker advertising performance and difficulties in the IP adaptations segment.

Following the disclosure, $WBTN fell 38.2% on August 9, 2024. An investor filed suit against Webtoon in the U.S. District Court for the Central District of California. 

What Can Investors Expect Now?

Webtoon Entertainment has agreed to a proposed $10.05 million settlement to resolve investor claims that it misled the market about its revenue growth and financial health.

If you were damaged due to this situation, you can file for a payout and get your share of the settlement. You can check if you are eligible and other details in the FAQ section.

Case Type

US Securities Class Action

Case Status

Stipulative Settlement

Alleged Offence

Misleading Statements,

Financial Misrepresentation,

Failure to Disclose,

Negligence

Suspected Party

Directors,

Management,

Investment Bank

Security Type

Stocks

Trade Direction

Long

Payout per Share

0.45

Filing date

09/05/2024

Lead Plaintiff Deadline

11/04/2024

Plaintiffs

Coy Brookman

Attorneys

Glancy Prongay & Murray LLP ; The Law Offices of Frank R. Cruz

Defendants

Junkoo Kim; David J. Lee ; Haejin Lee; Namsun Kim; Jun Masuda; Isabelle Winkles; Nancy Dubuc

Judge

Consuelo B. Marshall

Administrator

Verita Global

Attorney fee

$2,712,500

Trades matching type

FIFO

Webtoon Entertainment ($WBTN) $10.05 Million Investor Settlement

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