December 19, 2020 - An investor in shares of Green Dot Corporation (NYSE: GDOT) filed a lawsuit in the U.S. District Court for the Central District of California over alleged violations of Federal Securities Laws by Green Dot Corporation in connection with certain allegedly false and misleading statements made between May 9, 2018 and November 7, 2019.

Pasadena, CA based Green Dot Corporation operates as a financial technology and bank holding company in the United States. Green Dot Corporation reported that its annual Total Revenue rose from $890.15 million in 2017 to over $1.04 billion in 2018 and that its Net Income increased from $85.88 million in 2017 to $118.7 million in 2018.

On February 20, 2019, Green Dot Corporation CEO Steven W. Streit revealed during the FY 2018 conference call that the Company’s strategy of attracting “high-value” long-term customers at the expense of “one and done” customers was self-sabotaging, stating, “…that we are somewhat a victim of our own success in converting more and more of our quarterly active accounts to direct deposit active accounts.” These “one and done” customers represented a significant source of revenue in the Company’s legacy segment.

On May 8, 2019, Green Dot Corporation released its financial results for the first quarter of 2019, announcing dramatically reduced earnings guidance. During a conference call, the Company disclosed that it was “experiencing some erosion in the number of legacy product line, non-direct deposit active accounts, primarily from our legacy brick and mortar retail channel and to a lesser degree from our RushCard and account now digital direct brands.”

On this news, Green Dot’s share price dropped over 26%.

Then, on August 7, 2019, Green Dot Corporation released financial results for the second quarter of 2019, announcing another guidance reduction and disclosing “lower than anticipated prepaid unit sales that has caused a material reduction in active prepaid accounts”.

On November 7, 2019, the Company revealed a decline of 620,000 accounts in its active consumer business, mostly “one-time use accounts.” Shares of Green Dot Corporation (NYSE: GDOT) declined from $91.51 per share in September 2018 to as low as $21.97 per share on December 19, 2019.

According to the complaint the plaintiff alleges on behalf of purchasers of Green Dot Corporation (NYSE: GDOT) common shares between May 9, 2018 and November 7, 2019, that the defendants violated Federal Securities Laws.

More specifically, the plaintiff claims that between May 9, 2018 and November 7, 2019, Green Dot made false and/or misleading statements and/or failed to disclose that Green Dot's strategy to attract high-value long-term customers was at the expense of one and done customers, that Green Dot's one and done customers represented a significant source of revenues in its legacy segment, that consequently, Green Dot's strategy was self-sabotaging, and that as a result of the foregoing, Defendants' statements about its business and operations.