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Updated with comment from Zynga.
FarmVille maker Zynga got an increasingly rare piece of good news on Tuesday as a federal judge dismissed a lawsuit in which shareholders alleged that the social game company misled investors about its financial condition before and after its initial public offering.
Zynga went public at $9 billion in December 2011, but within a few weeks, the company’s stock faltered and then plummeted as the social-game publisher’s subsequent financial performance weakened. Zynga’s stock is now valued at $4.14 billion.
According to Reuters, U.S. District Judge Jeffrey White in San Francisco said that shareholders — despite their “excessively long and prolix” 110-page complaint — failed to include “relevant, basic factual details” to support their claims against Zynga and its then-chief executive, Mark Pincus. The suit also named underwriters Morgan Stanley and Goldman Sachs & Co.
Zynga said in a statement, “Today the court granted our motion to dismiss the plaintiff’s class action complaint in the securities litigation. We are pleased with today’s order and continue to believe in the merits of our defense. The focus for Zynga is on our forward-looking business and delivering on our 2014 goals of growing and sustaining our proven franchises and creating new hits.”
Joseph Tabacco, a partner at Berman DeValerio representing the plaintiffs, told Reuters that while his clients were disappointed with parts of the ruling, “we are confident that the case will proceed, as we believe we will more than satisfy the court’s concerns when we file our amended complaint.”