Deadline for Evolution AB class action lawsuit

Lea Hogg March 25, 2024

Investors have been sent a reminder of the imminent deadline of 25 March to file a lead plaintiff motion in the class action lawsuit against Evolution AB, trading as Evolution (OTC: EVVTY). The lawsuit pertains to those who acquired American Depositary Shares (ADSs) of Evolution during the period from 14 February 2019 to 25 October 2023.

The class action lawsuit alleges that Evolution was involved in generating revenue through illegal gambling activities, which has led to significant financial losses for investors. The lawsuit follows a series of events that negatively impacted Evolution’s stock price.

Market turbulence for Evolution and impact on stock market performance

On 24 January 24, 2022, Evolution, was shaken by a report from Analyst Alpha Generation Limited. The report cast a spotlight on a significant risk looming over the company’s revenue stream. It highlighted that a considerable part of Evolution’s income could be jeopardized by impending regulatory measures. The crux of the concern was Evolution’s alleged involvement with illegal gambling revenues.

The market’s reaction to this revelation was swift and severe. Investors, apprehensive about the potential fallout from such regulatory scrutiny, retreated en masse. This collective unease was reflected in the plummeting stock price of Evolution. By the close of the market on 27 January 2022, just three days after the report’s release, Evolution’s stock had tumbled by 14.7 percent. The shares, which had been trading at higher levels, settled at $115.00, marking a stark devaluation that underscored the gravity of the situation and the impact of the report’s findings on investor sentiment.

Following a request from the Australian gambling regulator to block six online gambling sites, five of which were clients of Evolution, the company’s stock price suffered a 6.2 percent drop, ending the day at $90.71 per share on 26 April, 2022. This event was a significant blow to Evolution, reflecting the market’s reaction to regulatory challenges faced by the company.

In a subsequent development, the Swedish Administrative Court ruled to maintain fines totalling approximately $17.8 million against several of Evolution’s customers for violating Swedish online gambling laws. This decision led to a further 10.9 percent decrease in Evolution’s stock price on 5 May, 2022, highlighting the financial impact of regulatory compliance issues on the company’s valuation.

Evolution faced a significant challenge when reports emerged of lobbying efforts against the proposed overhaul of UK gambling laws. This development posed a potential threat to the company’s operations, and the market’s reaction was swift and severe. Over the course of two days, Evolution’s stock price plummeted by 14.5 percent, ultimately closing at $87.25 per share on 11 May, 2022.

The following year, the company’s financial health was scrutinized once more with the release of its financial results for the first quarter of 2023. The report revealed a stagnation in its Random Number Generator (RNG) segment and only a marginal growth in the North American market. These disappointing figures contributed to another downturn in the company’s stock price, which had already been under pressure from the previous year’s events.