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Highlights
- WiseTech faces class action over alleged misleading guidance.
- Class action claims continuous disclosure laws breached in 2020.
- WiseTech plans to contest the allegations vigorously.
Australian logistics software giant WiseTech (ASX:WTC), is under legal scrutiny as a fresh class action emerges, alleging the company misled shareholders through optimistic earnings guidance and breached its continuous disclosure obligations. The allegations were filed by the law firm Phi Finney McDonald in the Supreme Court of Victoria, detailing that WiseTech’s management had issued “aggressive” earnings forecasts, despite ongoing acquisitions that reportedly underperformed.
The legal action centers around WiseTech's August 2019 guidance, issued for the 2020 financial year, which projected pre-tax earnings to land between $145 million and $153 million. This range represented a substantial anticipated growth of 34% to 42%, with an expected pre-tax margin of 33.1%. The claim asserts that WiseTech had ample opportunities to adjust its guidance but instead reiterated these forecasts, signaling to investors that the company’s financial targets were still achievable.
WiseTech’s aggressive acquisition strategy is also at the heart of the class action. According to Phi Finney McDonald, the company had acquired roughly 40 companies leading up to the claim period. Many of these acquisitions were perceived as part of a global expansion effort, yet some were reportedly struggling to meet performance expectations. The law firm contends that WiseTech’s management misrepresented the impact of these acquisitions, creating a misleading picture of the company’s financial health and growth potential.
Phi Finney McDonald argues that these actions not only misled investors but also violated WiseTech’s continuous disclosure obligations under Australian law. Continuous disclosure laws are designed to ensure that all material information likely to affect share prices is promptly made public, allowing investors to make informed decisions. The class action claims that WiseTech’s earnings guidance, as well as its reassurances to investors about staying “on track,” painted an inaccurate portrayal of its financial condition.
In response to the lawsuit, WiseTech has issued a statement indicating its intention to “vigorously defend” itself against these claims. WiseTech emphasized its commitment to transparency and compliance, adding that it will address the allegations in court. The legal proceedings are expected to shed light on WiseTech’s acquisition strategy, earnings forecasts, and the company’s disclosure practices.
This development represents a significant moment for WiseTech and its shareholders, as the court case could impact the company’s reputation and clarify its responsibilities under disclosure laws. Investors and analysts are closely monitoring the case, awaiting potential outcomes and their implications for WiseTech’s future.
