Fitbit Sued by Investors Over Alleged Tracking Inaccuracies
The new lawsuit follows a consumer lawsuit filed last week.
This story originally appeared on Fortune Magazine
It's going from bad to worse for Fitbit. Consumers last week sued the maker of fitness trackers over claimed inaccuracies in its heart rate monitor, prompting a sell-off of its shares. Now the company has a new headache.
On Monday, an investor filed a class action suit against Fitbit in California over alleged "fraud on the market" and U.S. securities law violations.
The lawsuit seeks compensation for anyone who purchased Fitbit shares during the company's IPO last summer up until last week when stories about the allegedly inaccurate heart monitor hit the press. The complaint points to the stock's fall of $1.20, or 5.8%, on January 6 to show the impact of the news.
"As a result of Defendants' false and/or misleading statements, Fitbit securities traded at inflated prices. However, after disclosure of Defendants' false and/or misleading statements, Fitbit's stock suffered a precipitous decline in market value, thereby causing significant losses and damages to Plaintiff and other Class members."
According to the complaint, Fitbit executives made "false and misleading" statements about the company's heart monitor technology to the media and in regulatory filings. The technology has come under scrutiny in light of last week's consumer complaint, which included allegations by a cardiologist that Fitbit's heart monitor consistently posts inaccurate results.
In response to questions last work from Fortune about the claimed inaccuracies, the company insisted its technology works as claimed, and vowed to fight the consumer lawsuit. As for the new investor case, a Fitbit spokesperson said:
"We have reviewed the complaint and believe it is meritless. We intend to defend this case vigorously."
Such shareholder lawsuits alleging "fraud on the market" are not uncommon after companies take a public relations hit, and are typically settled quietly. You can read the complaint for yourself below.
On Monday, Fitbit's shared price dropped below its $20 IPO price for the first time since the company went public in July, hitting an all-time low of $18.50. It has since been nudging back towards $20.