Apple Settles Class Action Lawsuit for $490 Million Over Misleading iPhone Sales Statements

Apple has reached a $490 million settlement in a class action lawsuit sparked by allegations that CEO Tim Cook made misleading statements about iPhone sales in China in 2018. The lawsuit centered on Cook’s optimistic comments during an investor conference call in November 2018, suggesting a strong start for the latest iPhone models in China. However, the reality deviated significantly from these initial assertions, leading to a substantial stock price drop when the truth emerged.

In January 2019, Apple shocked investors by announcing an expected revenue shortfall of $9 billion for the fiscal quarter, with a significant portion of this deficit attributed to underperforming sales in China. This adjustment marked a first for Apple since the iPhone’s introduction in 2007, prompting a rapid 10% decrease in Apple’s stock value, equating to a $70 billion loss for its shareholders.

Originally, Apple refuted claims that Cook’s comments had misled investors. However, after more than four years of legal wrangling and a decision by U.S. District Judge Yvonne Gonzalez Rogers to proceed with the case towards a trial set for September 9th, Apple opted to settle. Judge Gonzalez Rogers, known for presiding over the Epic v. Apple case, will conduct a hearing on April 30 to finalize the settlement agreement.

This settlement opens the possibility for investors who acquired Apple shares in late 2018 to receive a portion of the $490 million, although legal fees are expected to consume up to $122 million (or 25%) of the settlement amount. Despite the legal controversy and subsequent share price fallout, Apple’s stock has since rebounded significantly, more than quadrupling in value and enriching investors by an additional $2 trillion.