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Highlights
- WiseTech Global faces a new class action lawsuit related to its 2020 earnings guidance and alleged misleading disclosures.
- Shares of WiseTech dropped significantly in October but have since recovered to $133.21.
- Law firm Phi Finney McDonald claims WiseTech misled investors by overstating 2020 projections, causing shareholders to suffer losses.
- WiseTech plans to defend the claims, asserting no official court proceedings have yet been served.
WiseTech Global Ltd (ASX:WTC), a leading Australian technology firm, finds itself in the spotlight as news of a class action lawsuit emerges. Law firm Phi Finney McDonald has filed the suit in the Supreme Court of Victoria, representing shareholders who acquired WiseTech shares between August 2019 and February 2020. The class action accuses WiseTech of misleading investors with overly optimistic financial guidance for the 2020 fiscal year despite alleged challenges in integrating acquired businesses.
The allegations suggest that WiseTech issued its FY20 earnings forecast, projecting pre-tax earnings of $145–$153 million and anticipated growth of up to 42%, without reasonable grounds. The company reaffirmed this guidance in October and November 2019 but sharply revised it down to $114–$132 million in February 2020, citing integration delays and other operational hurdles. This revision caused a steep, two-day decline in WiseTech’s stock, which fell over 27% in a single day and continued to drop the following day by an additional 11%.
The suit further alleges that WiseTech failed to disclose potential risks stemming from its rapid acquisition strategy. Between 2015 and 2020, WiseTech acquired around 40 companies, including CargoWise, placing pressure on its capacity to achieve projected targets, according to the plaintiffs. The class action claims that, due to these alleged omissions, some shareholders overpaid for WiseTech shares or might not have purchased them at all had they known the full context.
WiseTech responded to the class action announcement, emphasizing that it has not yet received any official court proceedings and intends to "vigorously defend" itself against the claims.
While the lawsuit could present future implications for WiseTech, the stock has been resilient, rebounding from an October low of $99.37 back to pre-decline levels, trading at $133.21 as of Wednesday.
