A class action lawsuit was filed against Micron Technology, Inc. (MU) by Levi & Korsinsky on January 9, 2025. The plaintiffs (shareholders) alleged that they bought MU stock at artificially inflated prices between September 28, 2023, and December 18, 2024 (Class Period) and are now seeking compensation for their financial losses. Investors who bought Micron Technology stock during that period can click here to learn about joining the lawsuit.
Micron Technology is an American manufacturer of computer memory and data storage products. Micron is renowned for its DRAM (dynamic random access memory), NAND (Not AND), NOR (Not OR), and HBM (High Bandwidth Memory) semiconductor devices.
The company’s tall claims about the continued demand momentum for its NAND flash memory products and the related expectations of inventory normalization are at the heart of the current complaint.
Micron Technology’s Misleading Claims
According to the lawsuit, Micron Technology and two of its senior officers and/or directors (Individual Defendants) repeatedly made false and misleading public statements throughout the Class Period. Particularly, they are accused of omitting truthful information about product demand and ancillary issues from SEC filings and related material.
For instance, during the Class Period, Micron’s CEO stated that the company expected the consumer-focused markets to recover in 2024. Importantly, the industry TAM (Total Addressable Market) revenue was expected to surge in 2025 backed by solid growth from AI (artificial intelligence) and the shifting focus from data centers to edge computing.
Additionally, the defendants reiterated the same stance in the Annual report for Fiscal 2023 and the subsequent quarterly reports. Micron predicted that the company was poised for improved revenue, pricing, and profitability throughout Fiscal 2024 and Fiscal 2025. This was possible because the overall industry was witnessing increased AI-driven demand growth, normalizing customer inventory levels, and supply-side discipline.
However, subsequent events (discussed below) revealed that the defendants wilfully misled investors about the potential market recovery for its NAND products, and expected rise in revenues and profits in Fiscal 2025.
Plaintiffs’ Arguments
The plaintiffs maintain that the Defendants deceived investors by lying and withholding critical information about the business practices and prospects during the Class Period. Importantly, the Defendants are accused of misleading investors about the inventory normalization expectations and recovery in demand for its NAND products.
The information became clear on December 18, 2024, when Micron Technology released its Q1FY25 results. The company reported a worse-than-expected decline in revenues from its NAND flash memory products during Q1. Moreover, the company issued disappointing guidance for Q2FY25 owing to the deteriorating demand.
This was followed by a series of price target cuts by Wall Street analysts, who were unhappy with Micron’s disappointing guidance amid “significant weakness in demand in its consumer markets, especially for its NAND products.” All these factors led to a sharp decline in Micron’s stock price, dragging it down by 16.2% on December 19.
To conclude, the defendants allegedly misled investors about the potential recovery in demand for Micron’s NAND products and the related guidance for the segment. In the past year, MU stock has lost 5.1%.
