The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed in the U.S. District Court for the Southern District of New York on behalf of those who acquired Olo Inc. (“Olo”) (NYSE: OLO) securities between August 11, 2021 through August 11, 2022 (the “Class Period”). Investors have until November 25, 2022 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
Olo provides software to restaurants to assist with online ordering and food-delivery coordination.
In February 2020, the Company announced a partnership with Subway restaurants (“Subway”) to enable Subway’s more than 20,000 U.S.-based restaurants to handle digital orders from third-party “marketplaces” such as Uber Eats or DoorDash. Throughout the Class Period, Olo touted the growth of its active locations, with Subway accounting for approximately 20% of those locations. By the first quarter of 2022, the Company’s active locations had grown to approximately 82,000 – a 19% increase over the prior year.
On August 11, 2022, the Company reported its results for the second quarter of 2022 and reduced its guidance for full-year 2022. Olo also revealed that 2,500 Subway locations had begun to directly integrate with third-party marketplaces and that the remaining 15,000 Subway locations would be removed from the Company’s active locations count in the fourth quarter of 2022 and the first quarter of 2023. In a stunning admission, the Company acknowledged that the previously undisclosed Subway exodus had been known internally throughout the Class Period. Indeed, Chief Financial Officer (“CFO”) Peter J. Benevides (“Benevides”) instructed analysts that “when we entered the year, there was an indication that Subway may plan to directly integrate with marketplaces.” In fact, CFO Benevides admitted Olo took the undisclosed pending Subway departure into account when providing guidance for the year. Stunned analysts asked, “just to be clear, when you started the year, you’ve assumed less Subway contributions and it seems like that is playing out.” On this news, the price of Olo shares declined by $4.73 per share, or approximately 36.41%, from $12.99 per share to close at $8.26 on August 12, 2022.
The lawsuit alleges that, throughout the Class Period, Defendants misled investors and/or failed to disclose that: (1) Subway was ending its contract with Olo; and (2) Olo’s key business metric – active locations – could not continue to grow as Defendants predicted due to the loss of Subway’s business.