Bragar Eagel & Squire, P.C. Reminds Investors That Class Action Lawsuits Have Been Filed Against Nextdoor, Snowflake, and Chemours and Encourages Investors to Contact the Firm

NEW YORK, March 25, 2024 (GLOBE NEWSWIRE) -- Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, reminds investors that class actions have been commenced on behalf of stockholders of Nextdoor Holdings, Inc. f/k/a Khosla Ventures Acquisition Co. II (NYSE: KIND), Snowflake Inc. (NYSE: SNOW), and The Chemours Company (NYSE: CC). Stockholders have until the deadlines below to petition the court to serve as lead plaintiff. Additional information about each case can be found at the link provided.

Nextdoor Holdings, Inc. f/k/a Khosla Ventures Acquisition Co. II (NYSE: KIND)

Class Period: July 6, 2021 - November 8, 2022 (Publicly Traded Class A Common Stock Only)

Lead Plaintiff Deadline: April 29, 2024

Nextdoor operates a hyperlocal online social networking platform that connects neighbors, public agencies, and businesses via the internet. Nextdoor was created through the November 5, 2021 merger of a privately held company called Nextdoor, Inc. and a publicly traded special purpose acquisition company (SPAC or blank-check company), then called Khosla Ventures Acquisition Co. II (“KV Acquisition Co.”), with KV Acquisition Co. serving as the surviving entity and changing its name to Nextdoor Holdings, Inc. after the merger.

The Nextdoor class action lawsuit alleges that defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose that: (i) Nextdoor’s financial results prior to the merger had been temporarily inflated by the ephemeral effects of the COVID-19 pandemic, which had pulled forward demand for Nextdoor’s platform and cannibalized future advertising revenue growth; (ii) rather than being sustained, such growth trends had already begun reversing at the start of the Class Period; (iii) Nextdoor’s total addressable market was materially smaller than the 312 million households represented to investors; and (iv) by the start of the Class Period, Nextdoor’s most important market – the U.S. market – was already substantially saturated, impairing Nextdoor’s ability to monetize users and increase its average revenue per weekly active user (“ARPU”) or U.S. weekly active users (“WAUs”).

On March 1, 2022, Nextdoor reported that the revenue growth rate in the fourth quarter had declined sequentially by 18% to 48% year-over-year growth, down from the 66% growth rate in the most recent quarter reported to investors. In addition, Nextdoor reported quarterly ARPU of $1.65, revealing that the ARPU growth rate in the quarter had declined substantially by 26% to just 12% year-over-year growth from 38% growth in the third quarter, which indicated that Nextdoor’s ability to monetize its platform was faltering. On this news, the price of Nextdoor Class A common stock declined approximately 14%.

Then, on May 10, 2022, Nextdoor revealed that its global WAUs growth had increased just 1% sequentially (from 32% year-over-year growth in the fourth quarter of 2021 to 33% year-over-year growth in the first quarter of 2022) and that U.S. WAUs had actually suffered a sequential decline of approximately one hundred thousand users. On this news, the price of Nextdoor Class A common stock fell approximately 8%.

Thereafter, on August 9, 2022, Nextdoor revealed that its platform continued to materially decline, reporting that revenue growth slowed to just 19% year-over-year during the quarter and that Nextdoor’s U.S. WAUs had declined for the second quarter in a row to 29.2 million. On this news, the price of Nextdoor Class A common stock fell approximately 25%.

Finally, on November 8, 2022, Nextdoor reported that its revenues during the quarter declined sequentially by $1 million to $54 million, representing just 2% year-over-year growth, and that Nextdoor’s quarterly ARPU growth was increasingly negative, contracting by 12% compared to the prior year quarter. On this news, the price of Nextdoor Class A common stock fell approximately 11%, further damaging investors.

For more information on the Nextdoor class action go to: https://bespc.com/cases/KIND

Snowflake Inc. (NYSE: SNOW)

Class Period: September 16, 2020 - March 2, 2022 (Class A Common Stock Only)

Lead Plaintiff Deadline: April 29, 2024

Snowflake is a cloud data platform that enables its enterprise customers to consolidate data into a single source to build data-driven applications and share data.

The Snowflake class action lawsuit alleges that defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose that: (i) Snowflake had systematically oversold capacity to customers which created a misleading appearance of the demand for Snowflake’s products and services; (ii) Snowflake had provided significant discounts to its customers prior to its initial public offering (“IPO”) that temporarily boosted sales but would not be sustainable after the IPO and/or necessitate platform efficiency adjustments that negatively impacted client consumption and Snowflake’s revenue and profit margins; (iii) as a result, Snowflake’s customers were poised to roll over a material amount of unused credits (and thereby cannibalize future sales) at the end of their contracts’ terms or to refuse to renew their contracts at prior consumption levels or at all; and (iv) consequently, Snowflake’s product revenue and remaining performance obligations had been artificially inflated leading up to and during the Class Period.

On March 2, 2022, Snowflake revealed that its product revenue growth rate for fiscal 2023 was projected to be slashed to a range of 65% to 67%, far below the triple-digit growth and purportedly ongoing favorable business trends highlighted by defendants during the Class Period.  On a related earnings call also held on March 2, 2022, Snowflake CFO, defendant Michael P. Scarpelli, further revealed that Snowflake customers were consuming at a reduced rate, which he blamed on “platform enhancements . . . which lowered credit consumption.”  On this news, the price of Snowflake Class A common stock fell nearly 28% over several trading sessions, damaging investors. 

For more information on the Snowflake class action go to: https://bespc.com/cases/SNOW

The Chemours Company (NYSE: CC)

Class Period: April 28, 2023 - February 28, 2024

Lead Plaintiff Deadline: May 20, 2024

Headquartered in Wilmington, Delaware, Chemours is an industrial and specialty chemical company for a number of markets including, among others, the “coatings, plastics, refrigeration and air conditioning, transportation, semiconductor and consumer electronics, general industrial, and oil and gas” markets.  

After the market closed on February 9, 2023, Chemours announced its fourth quarter and full year 2022 financial results.  As is relevant here, Chemours announced Free Cash Flow (defined as cash flows from operations, less purchases of property, plant, and equipment) of $94 million in the fourth quarter of 2022 and $447 million in full year 2022, “demonstrating [Chemours’s] continuing ability to generate strong Free Cash Flow.”

The following day, February 10, 2023 (the first day of the Class Period), Chemours filed its 2022 annual report on Form 10-K (the “2022 Annual Report”) with the SEC and reiterated that it generated Free Cash Flow of $447 million in full year 2022.  In connection with the 2022 Annual Report, the Company’s CEO Mark Newman and then CFO Sameer Ralhan certified the accuracy of the Company’s financial reports and the adequacy of the Company’s internal control over financial reporting.

Chemours reported quarterly and year-to-date Free Cash Flow metrics in connection with each of the Company’s quarterly financial results throughout the remainder of the Class Period.  Each of the Company’s quarterly financial reports filed on Form 10-Q during the remainder of the Class Period contained substantially identical certifications to those set forth in the 2022 Annual Report from Chemours’s CEO Newman and CFO Ralhan (first quarter of 2023) and CFO Jonathan Lock (second and third quarters of 2023).  

Prior to and during the Class Period, Chemours also set and publicized certain criteria for executive compensation.  For example, pursuant to Chemours’s Annual Incentive Plans (“AIPs”) for 2022 and 2023, the Company’s senior executive officers (including the CEO and CFO) were entitled to additional cash compensation if certain targets, including Free Cash Flow targets, were met.  Similarly, pursuant to Chemours’s Long-Term Incentive Plans (“LTIPs”), the Company’s senior executive officers (including the CEO and CFO) were entitled to stock compensation if certain targets, including Free Cash Flow Conversion (defined as cash flows from operations, less purchases of property, plant, and equipment divided by Adjusted EBITDA) targets, were met.  

According to the complaint, notwithstanding Defendants’ repeated assurances regarding the accuracy of the Company’s financial reports and the adequacy of the Company’s internal control over financial reporting, investors began to learn the truth on February 13, 2024, when Chemours “announced that it has postponed the release of its financial results and conference call related to the fourth quarter and full year ended December 31, 2023, which had previously been scheduled for February 14, 2024 and February 15, 2024, respectively,” and that it now “expect[ed] to issue its fourth quarter and full year 2023 financial results after market close on Wednesday, February 28, 2024.”  According to the Company, the delay was necessary “because it needs additional time to complete its year-end reporting process” and “is evaluating its internal control over financial reporting . . . with respect to maintaining effective controls related to information and communications.” Chemours also revealed that it needed additional time for its Audit Committee to conduct a related internal review.

In response to this initial development, the price of Chemours common stock fell $3.85 per share, or more than 12%, from a close of $30.49 per share on February 13, 2024, to close at $26.64 per share on February 14, 2024.

Then, before the market opened on February 29, 2024, Chemours stunned investors when it announced that it was delaying the filing of its annual report for 2023 and that its Board of Directors had “place[d] President and Chief Executive Officer Mark Newman, Senior Vice President and Chief Financial Officer Jonathan Lock and Vice President, Controller and Principal Accounting Officer Camela Wisel on administrative leave . . . pending the completion of an internal review being overseen by the Audit Committee of the Board of Directors with the assistance of independent outside counsel.”  According to the Company, the scope of the investigation “includes the processes for reviewing reports made to the Chemours Ethics Hotline” and Chemours’s “practices for managing working capital, including the related impact on metrics within the Company’s incentive plans [and] certain non-GAAP metrics” in the Company’s financial reports.  Given the importance of these issues—not only to executive compensation, but also investors’ assessment of Chemours’s financial performance—the Company acknowledged that it “is evaluating one or more potential material weaknesses in its internal control over financial reporting as of December 31, 2023 with respect to maintaining effective controls related to the control environment, including the effectiveness of the ‘tone at the top’ set by certain members of senior management.”

In response to these revelations, the price of Chemours common stock plummeted $9.05 per share, or more than 31%, from a close of $28.72 per share on February 28, 2024, to close at $19.67 per share on February 29, 2024.

The Complaint alleges that, throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business and operations.  Specifically, Defendants misrepresented and/or failed to disclose that: (1) certain of the Company’s senior executive officers manipulated Free Cash Flow targets as a means to maximize additional cash and stock incentive compensation applicable to executive officers pursuant to the Company’s AIPs and LTIPs; (2) the Company’s accounting practices and procedures, including its internal control over financial reporting, were deficient; and (3) as a result, Defendants’ statements about the Company’s business, operations, and prospects lacked a reasonable basis.

For more information on the Chemours class action go to: https://bespc.com/cases/CC

About Bragar Eagel & Squire, P.C.:

Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York, California, and South Carolina. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.

Contact Information:

Bragar Eagel & Squire, P.C.
Brandon Walker, Esq.
Marion Passmore, Esq.
(212) 355-4648
[email protected]
www.bespc.com