Full opinion text
OPINION & ORDER SWEET, District Judge. Pursuant to the transfer order from the United States Judicial Panel on Multidistrict Litigation (the “MDL Panel”), entered on October 4, 2012, 41 actions stemming from the May 18, 2012 initial public offering (“IPO”) of Facebook, Inc. (“Face-book” or the “Company”) are presently before this Court. The instant motion relates to Plaintiffs North Carolina Department of State Treasurer on behalf of the North Carolina Retirement Systems; Banyan Capital Master Fund Ltd.; Arkansas Teacher Retirement System; and the Fresno County Employees’ Retirement Association; and the Named Plaintiffs’ Jose G. Galvan and Mary Jane Lule Galvan (collectively, “Lead Plaintiffs” or “Plaintiffs”) consolidated class action complaint (the “Consolidated Class Action Complaint” or “CAC”) alleging federal securities claims (the “Securities Actions”) against the Defendants Facebook, certain Facebook directors and officers (the “Individual Defendants”), and underwriters of the initial public offering (“IPO”) of Facebook (the “Underwriter Defendants”) (collectively, “Defendants” or “Facebook Defendants”). The Defendants have moved to dismiss the Class Action Complaint pursuant to Federal Rules of Civil Procedure 12(b)(6) for failure to state a claim. Based on the conclusions set forth below, Defendants’ motion to dismiss is denied. 1. Prior Proceedings On September 20, 2012, the MDL Panel held a hearing to determine whether the pending 41 filed actions should be transferred to the Southern District of New York. On October 4, 2012, the MDL Panel issued a transfer order, finding that the “Southern District of New York is an appropriate transferee district for pretrial proceedings in this litigation,” reasoning that “[m]uch of the relevant discovery will be located in New York...." In re Face-book, IPO Secs. & Derivative Litig., 899 F.Supp.2d 1374, 1376-77 (U.S.Jud.Pan. Mult.Lit.2012). The cases were assigned to this Court for coordination or consolidation of the pretrial proceedings. Id. Of the 41 actions presently before the Court due to the MDL Panel’s transfer order, 30 of these actions allege violations of the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”) against movants and various underwriter defendants. On December 6, 2012, this Court issued an opinion, In re Facebook, IPO Sec. & Derivative Litig., 288 F.R.D. 26 (S.D.N.Y.2012) (the “December 6, 2012 Opinion”), which consolidated the actions alleging violations of the Securities Act and Exchange Act into the Securities Actions and Lead Plaintiffs were appointed. The class actions against the NASDAQ OMX Group Ine. and The NASDAQ Stock Market LLC (collectively “NASDAQ”) alleging federal securities (the “NASDAQ Securities Actions”) and negligence claims (the “NASDAQ Negligence Actions”) (collectively, the NASDAQ Actions”) were also consolidated. The cases alleging derivative claims (the “Derivative Actions”) are currently not consolidated, with individual plaintiffs in the Derivative Actions having brought forth separate actions. Lead Plaintiffs for the Securities Actions filed the Consolidated Class Action Complaint on February 28, 2013. The CAC alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act. The Defendants filed the instant motion to dismiss the Securities Actions on April 30, 2013. Oral arguments were held, and the motion was marked fully submitted, on October 8, 2013. II. Allegations of the Consolidated Class Action Complaint Alleged facts and prior proceedings underlying this opinion are set out in the December 6, 2012 Opinion. Accordingly, only facts relevant to this motion will be provided below. Because this is a motion to dismiss under Fed.R.Civ.P. 12(b)(6), the following facts, which this Court assumes to be true, are drawn from the CAC. See Tellabs, Inc. v. Makor Issues & Rights, Ltd,., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007) (“[F]aced with a Rule 12(b)(6) motion to dismiss a § 10(b) action, courts must, as with any motion to dismiss for failure to plead a claim on which relief can be granted, accept all factual allegations in the complaint as true.”). The CAC refers to the events surrounding and arising out of Facebook’s May 18, 2012 IPO. Facebook is a worldwide online social networking company that (i) builds tools that enable users to connect, share, discover and communicate with each other; (ii) enables developers to build social applications of Facebook or to integrate their websites with Facebook; and (iii) offers products that enable advertisers and marketers to engage with its users. Facebook is currently the world’s largest social network. (CAC ¶ 84.) As of March 31, 2012, Facebook reported that 901 million “active users” accessed its website each month, nearly half the people who use the Internet and approximately 13% of the world’s population. (Id.) Facebook generally does not charge its users for any of the social networking services it provides. Instead, Facebook’s business model depends almost entirely on selling space on its network to companies that want to reach Facebook’s user base via advertisements displayed to Facebook members. The Company’s advertising revenue accounted for 98%, 95% and 85% of the Company’s revenues in 2009, 2010, and 2011 respectively. (Id. 191.) In 2011, Facebook began to explore engaging in an IPO to compete with other rival cash-rich technology companies. The Company’s shares were traded on private exchanges, but accessing the public markets through an IPO would provide the Company with large amounts of cash, create a highly liquid market for its stock and had the potential to significantly increase the Company’s value, among other benefits. (M.H8S.) On February 1, 2012, Facebook publicly filed its initial registration statement with the SEC (the “Feb. 1 Registration Statement”). (CAC ¶ 89.) The Feb. 1 Registration Statement contained historical data about Facebook’s performance and a description of risks associated with the company. It stated that, “[s]ince January 2011, Facebook.com has been the number one website worldwide,” with more than 845 million “monthly active users” as of December 31, 2011, who collectively spent on average “9.7 billion minutes per day on Facebook.” Feb. 1 Registration Statement, at 79. It further stated that the Company has consistently “experienced rapid growth in the number of users and their engagement.” Id., at 1. Facebook’s advertising and total revenue grew from approximately $153 million to $3.2 billion from 2007 to 2011, a growth of more than twenty times in four years. (CAC ¶ 92.) During this time period, Facebook’s annual revenue grew from $153 million to more than $3.7 billion. (Id.) Facebook ascribed its financial results to several factors. The first and principal factor was the growing usage of Facebook on mobile devices, as opposed to the use of Facebook through traditional, stationary desktop computers. (CAC ¶ 95.) A second factor was the Company’s “product decisions,” decisions Facebook made concerning the design and features of its website, the type of advertising it displayed and the price of the advertisements. (CAC ¶ 96.) The usage of Facebook on mobile devices was critical to Facebook’s financial performance for several reasons. First, Faeebook’s mobile market was extremely large: approximately half of Faeebook’s monthly users accessed the website through their mobile devices, either as a supplement to their use of Facebook through desktop computers or as their only means of accessing Facebook. Second, the Company’s mobile users were growing more rapidly than the rest of the Company’s user base. Facebook anticipated the growth rate of its mobile users to exceed the growth rate of their overall member base for the foreseeable future. Third, while Facebook showed large volumes of advertising to users who accessed its website through desktop computers, it did not yet show advertising to its mobile users. Mobile users were, at that time, an unmonetized resource and an important factor for Facebook’s future growth. (CAC ¶ 94.) The Feb. 1 Registration Statement emphasized that the mobile market was a “critical” area of “growth” and a “significant opportunity” that the Company was actively developing products to capitalize on. Feb. 1 Registration Statement, at 4. The Feb. 1 Registration Statement also included warnings of risk factors to potential investors. These warnings included specific disclosures on the impact of mobile usage and that Facebook’s ability to tap into this potential revenue stream could have an effect on the Company’s revenues: • “Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results.” Feb. 1 Registration Statement, at 5. • “Our advertising revenue could be adversely affected by a number of other factors, including: ... increased user access to and engagement with Facebook through our mobile products, where we do not currently directly generate meaningful revenue, particularly to the extent that mobile engagement is substituted for engagement -with Facebook on personal computers where we monetize usage by displaying ads and other commercial content.” Feb. 1 Registration Statement, at 12; accord Registration Statement, at 13. • “We had more than 425 million MAUs [monthly active users] who used Facebook mobile products in December 2011. We anticipate that the rate of growth in mobile users will continue to exceed the growth rate of our overall MAUs for the foreseeable future, in part due to our focus on developing mobile products to encourage mobile usage of Facebook. Although the substantial majority of our mobile users also access and engage with Face-book on personal computers where we display advertising, our users could decide to increasingly access our products primarily through mobile devices. We do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven. Accordingly, if users continue to increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetization strategies for our mobile users, our revenue and financial results may be negatively affected.” Feb. 1 Registration Statement, at 13; accord Registration Statement, at 14. • ‘We believe that our ability to compete effectively depends upon ... our ability to successfully monetize mobile usage.” Feb. 1 Registration Statement, at 14; accord Registration Statement, at 15-16. • We do not currently display ads to users who access Facebook via mobile apps or our mobile website. To the extent that increasing usage of Facebook through mobile apps or our mobile website substitutes for the use of Facebook through personal computers where we do show ads, the number of ads that we deliver to users and our revenue may be negatively affected unless and until we include ads or sponsored stories on our mobile apps and mobile website. We believe that people around the world will continue to increase their use of Facebook from mobile devices, and that some of this mobile usage has been and will continue to be a substitute for use of Facebook through personal computers.” Feb. 1 Registration Statement, at 46; accord Registration Statement, at 51. • “We do not show ads or directly generate any meaningful revenue from users accessing Facebook through our mobile products.... ” Feb. 1 Registration Statement, at 79; accord Registration Statement, at 93. • “We believe that mobile usage of Facebook is critical to maintaining user growth and engagement over the long term, and we are actively seeking to grow mobile usage, although such usage does not currently directly generate any meaningful revenue.” Feb. 1 Registration Statement, at 81; accord Registration Statement, at 94. The Feb. 1 Registration Statement also noted that Facebook “prioritizes user engagement over short-term financial results,” and thus “frequently make[s] product decisions that may reduce our short term revenue.” Feb. 1 Registration Statement, at 17. It also explained its revenue trends: Our revenue trends are also affected by ad inventory management changes affecting the number, size, or prominence of ads we display. For example, in the fourth quarter of 2010, we significantly increased the number of ads on many Facebook pages. As another example, in the fourth quarter of 2011, we increased the reserve price (i.e., the minimum price threshold) in our advertising auction system in order to reduce the frequency with which low quality ads are displayed to users. This change caused a reduction in the overall number of ads shown and increased the average price per ad as a result of factors including the removal of ads with bids that were below the reserve price and some advertisers raising their bids in response to this change. For this particular change, we estimate that the decrease in the number of ads displayed and the increase in average price per ad approximately offset each other such that the impact on total revenue was minimal. Id. at 46-47; accord Registration Statement, at 53. The market reacted positively to the disclosures in the Feb. 1 Registration Statement, including the Company’s position on capitalizing the mobile market. (CAC ¶ 97.) Bloomberg reported that Facebook expected its “next 1 billion users to come mainly from mobile devices,” and was therefore “increasing its focus on mobile technology to take advantage of the shift to smartphones and tablets.” Similarly, The New York Times reported that “the filing shed some light on how [Face-book’s] meteoric run has turned the upstart into a formidable money maker.... [M]any analysts believe Facebook’s fortunes will rapidly multiply as advertisers direct more and more capital to the Web’s social hive.” On February 28, 2012, the Securities and Exchange Commission (the “SEC”) sent Facebook a “comment letter” concerning certain of the Company’s disclosures in the Feb. 1 Registration Statement (the “SEC Letter”). (CAC ¶ 98.) In the SEC Letter, the SEC made note that the Feb. 1 Registration Statement stated “that users ‘could decide’ to increasingly access your products primarily through mobile devices____” Letter from SEC to Face-book, at 3 (Feb. 28, 2012). The SEC instructed Facebook to “ensure that your disclosure fully addresses the potential consequences to your revenue and financial results rather than just stating that they ‘may be negatively affected’ ” assuming that Facebook’s mobile monetization efforts were unsuccessful. Id. The SEC further instructed Facebook to “describe any known trends or uncertainties that have had, or that you reasonably expect will have, a material favorable or unfavorable impact on sales or results of operations.” Id. at 5. On March 7, 2012, Facebook responded to the SEC’s comment letter. In its response, Facebook stated that it could not disclose the potential impact of mobile usage on its revenue because it was unable to determine that impact. (CAC ¶ 102.) Facebook asserted that because many of its mobile users also continued to access Facebook through their desktop computers, the Company “cannot specifically determine how mobile use is a substitute for, rather than incremental to, use on personal computers.” Thus, Facebook stated that it was unable to “specifically assess the impact of increasing mobile use on its revenue and financial results” at that time. (Id.) Facebook subsequently revised its Registration Statement to include more specific information about the trend of increasing mobile usage: • “Increasing Mobile Usage. Increasing use of Facebook on mobile devices will also affect our performance, particularly if mobile use substitutes for use on personal computers. Historically, we have not shown ads to users accessing Face-book through mobile apps or our mobile website and we cannot be certain that our mobile monetization approaches will be successful in generating meaningful revenue. We cannot quantify the extent to which mobile usage of Facebook is substituting for, rather than incremental to, usage of Facebook through personal computers, but we generally expect mobile usage to increase at a faster rate than usage through personal computers for the foreseeable future.” See Registration Statement, Mar. 7, 2012, at 51 (“Mar. 7 Registration Statement”); accord Registration Statement, at 53. • “We had 432 million MAUs who used Facebook mobile products in December 2011. While most of our mobile users also access Facebook through personal computers, we anticipate that the rate of growth in mobile usage will exceed the growth in usage through personal computers for the foreseeable future.... [W]e do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven. Accordingly, if users increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetization strategies for our mobile users, or if we incur excessive expenses in this effort, our financial performance and ability to grow revenue would be negatively affected.” Mar. 7 Registration Statement, at 14; accord Registration Statement, at 14. • “We had 488 million MAUs who used Facebook mobile products in March 2012. While most of our mobile users also access Facebook through personal computers, we anticipate that the rate of growth in mobile usage will exceed the growth in usage through personal computers for the foreseeable future.... [W]e do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven.” Registration Statement, April 23, 2012, at 14 (“April 23 Registration Statement”); see also Registration Statement, at 14 (adding additional disclosure based on information from the second quarter that “We believe this increased usage of Facebook on mobile devices has contributed to the recent trend of our daily active users (DAUs) increasing more rapidly than the increase in the number of ads delivered”). Facebook also included positive statements regarding mobile usage; We experienced growth in DAUs [daily active users] across major markets including the United States, Brazil, and India. Increased mobile usage was a key contributor to this growth. DAUs as a percentage of MAUs [monthly active users] increased from 55% in March 2011 to 58% in March 2012, which we believe was driven entirely by increased mobile usage of Facebook. We believe that increases in DAUs and in DAUs as a percentage of MAUs generally positively affect our revenue because increases in user engagement may enable us to deliver more relevant commercial content to our users and may provide us with more opportunities for monetization. Registration Statement, at 50. In March and April 2012, Facebook began to prepare for its “roadshow,” (CAC ¶ 1C3.) Roadshows are a series of meetings around the country, primarily with groups of institutional investors, where a company makes presentations and answers investor questions regarding its upcoming IPO. The roadshow is an important part of the IPO process as it directly markets an IPO to institutional investors and generates interest in the IPO. (Id.) As part of this process, companies will typically provide its underwriters with the company’s projections, and underwriters will typically use these projections to create their own analysis and provide their own projections. Defendant Ebersman and Facebook’s Treasurer, Cipora Herman (“Herman”), were the Facebook executives who had principal responsibility for managing the Company’s roadshow. (CAC ¶ 105.) The Lead Underwriters built the “book” of orders for the IPO during the roadshow, which contained the number of shares each institutional investor wanted to purchase, as well as the price that each investor was willing to pay for the stock. Facebook and the Lead Underwriters then used the orders in the book to determine how many shares to sell in the IPO and the price per share. (Id.) In the time leading up to the roadshow, Facebook continued to make positive public statements emphasizing its growth. (CAC ¶ 110.) These comments included positive remarks on Facebook’s ability to monetize the mobile market. In the March 7, 2012 amendment to the Registration Statement, Facebook stated that it was beginning to display one of its principal advertising products to mobile users. See Mar. 7 Registration Statement, at 14 (“In February 2012, we announced plans to include sponsored stories in users’ mobile News Feeds.”). Facebook also noted that the number of users who accessed its website through mobile products had grown to 488 million as of March 31, 2012, an increase of 15% over such users as of December 2011, in the Company’s April 23, 2012 amended Registration Statement. April 23 Registration Statement, at 1. On April 16, 2012, the Company’s Chief Financial Officer (“CFO”), Defendant Ebersman, provided revenue guidance to the analysts from the investment banks that were underwriting the IPO (the “Syndicate Analysts”). (CAC ¶ 116.) This presentation included Facebook’s estimated revenues for the second quarter of 2012 and the full year. This information allowed the Syndicate Analysts to generate estimates of the Company’s revenues and financial results, which would then be incorporated into an “institutional selling memoranda” that the Underwriter Defendants would use to market the IPO to institutional investors. (Id.) At the meeting, Ebersman informed the Syndicate Analysts that Facebook believed it would report revenues of as much as $1.2 billion for the second quarter of 2012 and $5 billion for the full 2012 year. These figures translated into year-over-year growth rates of as much as 34% for the second quarter and 35% for the year. (CAC ¶ 107.) The Syndicate Analysts incorporated the Company’s internal estimates into their financial models and virtually mirrored Facebook’s projections: The Syndicate Analysts’ predictions translated into expected year-over-year growth rates of up to 35% for the second quarter and 39% for the year. The Syndicate Analysts’ estimates were then incorporated into the institutional selling memoranda that the Underwriter Defendants used to market the IPO to investors. (Id. ¶¶ 108-09.) On May 3, 2012, Facebook filed an amended Registration Statement (the “May 3 Registration Statement”) announcing that it was planning to sell more than 337 million shares in the IPO at a price between $28 and $35 per share. (CAC ¶ 113.) On the'same day, Facebook posted its roadshow video presentation on its website, which featured Defendant Chief Operating Officer Sandberg stating that the mobile market was “a key area of growth for Facebook” and that Facebook was not experiencing challenges in the mobile market: “For most companies, the mobile environment is a challenge, because it’s so small it requires new ad formats, but that’s not the case for Facebook.” Sandberg noted that Facebook had “just introduced [one of its principal advertising products] ... on mobile devices” and that these advertisements had “become a really natural part of the Facebook mobile experience.” (Id. ¶ 114.) The market interest for Facebook shares during this time was extremely high. Investor demand to attend the roadshow was huge, and many projected the IPO to be one of the largest IPOs in history. The New York Times reported on May 3, 2012: Facebook, which plans to make a market debut this month that could value it at $86 billion, is the stock that everyone seems to want.... The excitement over Facebook has come on the back of its rapid growth. For many, Facebook is the Internet. After a flurry of eye-popping market debuts by other Internet start-ups, ... Facebook’s will be the biggest yet.... Demand to attend the Facebook [roadshow] presentations has been extraordinarily high, with underwriters already drawing up waiting lists for the meetings[.] Similarly, Reuters quoted an analyst from the research firm IPO Boutique as stating that “I have not seen as broad based interest in an IPO since Google. Investor demand is immense.... I expect a roadshow that will rival all roadshows where investors will be turned away at the door.” Facebook held its first live roadshow presentation on May 7, 2012. (CAC ¶ 118.) Based on the roadshow presentation and the Registration Statement, analysts widely recommended that investors buy Face-book stock. Analysts also widely reported that, for the second quarter and year-end 2012, Facebook would experience revenue growth rates of at least 35% year-over-year, based in part on the Company’s ability to make money from its mobile users. (Id. ¶¶ 120-21.) Analysts did not appear worried about the monetization issues associated with mobile usage. A Sterne Agee report recommended a “buy” of Facebook stock, noting that Facebook had a strong position in the mobile market “[w]ith 488 million MAUs [monthly active users] using Facebook mobile products in the month of March 2012, [Facebook] clearly has the reach on mobile platforms ____” (Id. ¶ 121.) Sterne Agee concluded that “mobile monetization [is] a significant long-terra growth opportunity for [Facebook].” (Id.) However, on May 7, 2012, hours after its first roadshow presentation, Facebook’s management determined that the Company was facing difficulty in meeting its previous revenue projections for the second quarter of 2012 and the full year. (CAC ¶ 122.) Two developments were causing the change in analysis: First, during the second quarter of 2012, Facebook’s users increasingly migrated from desktop computers, where the Company displayed large amounts of ads, to mobile devices, where the Company displayed much less advertising. As such, Facebook was generating less advertising revenue than projected. Second, the Company had made certain product decisions in the second quarter of 2012 that reduced the average amount of advertisements displayed to users on some pages, which exacerbated the deterioration in its advertising revenues caused by increasing mobile usage. (Id.) On the evening of May 7, 2012, Ebersman approached the lead Morgan Stanley banker on the IPO, Michael Grimes (“Grimes”), and informed him that, based on second quarter data received to date, Ebersman was no longer confident that Facebook would meet its internal revenue estimates. (Id. ¶ 123.) Ebersman informed Grimes that, “based upon their experience in Q2 to date, [Ebersman] was less confident in his financial projections— in reaching or exceeding his financial projections than previously [sic].” (Id.) Ebersman further informed Grimes that two developments had caused the deterioration in Facebook’s revenues: increasing mobile usage and the Company’s product decisions. (Id.) By May 8, 2012, Facebook had cut its projected revenue figures for the second quarter of 2012 by $100 million, or more than 8.3%, and for the year by $175 million, or 3.5%. (CAC ¶ 124.) Facebook determined that its revenue for the second quarter would be as low as $1.1 billion, or 8.3% below the top of its prior range, and its revenue for 2012 would be between $4,825 billion and $4.85 billion, or as much as $175 million less than previously estimated, a decline of up to 3.5%. The revised revenue estimates translated into sharply lower year-over-year revenue growth rates of as little as 23% for the second quarter and 30% for the year, as compared to growth rates of as much as 34% for the second quarter and 35% for the year based on the Company’s prior estimates. (Id.) These figures were far below the Syndicate Analysts’ estimates. (Id. ¶ 126.) On May 8, 2012, Facebook’s most senior executives determined that the change was so significant that it warranted disclosure to the Syndicate Analysts. (Id. ¶ 125.) Facebook’s Treasurer, Herman, sent an email to employees in the finance department with the subject line: “Q2 estimates from analysts IMPORTANT PLS THIS MORNING.” (Id. (emphasis in original)). Herman wrote that Facebook had “updated our forecast and we’re trying to gauge how far off our new forecast is from where the analysts are coming out.” (Id.) Herman stated that she and Morgan Stanley bankers immediately needed to see “the q2-q4 by quarter revenue estimates from the analysts for whom we have detailed models,” and that she was “[cjopying [a Morgan Stanley banker] on this so we can get some efficiency — I don’t want to be the bottleneck in getting the info to MS.” (Id.) After Morgan Stanley bankers had compared Facebook’s revenue figures with the Syndicate Analysts’ estimates, Grimes advised Ebersman that Facebook should immediately provide its new revenue figures to the Syndicate Analysts so that they could revise their models based on this new information and provide it to the Company’s largest potential investors. (Id. ¶ 126.) The next day, May 9, 2012, Facebook filed a Free Writing Prospectus (the “FWP”) and an Amended Registration Statement (“May 9 Registration Statement”). (CAC ¶ 128.) The May 9 Registration Statement and FWP both stated: Based upon our experience in the second quarter of 2012 to date, the trend we saw in the first quarter of DAUs [daily active users] increasing more rapidly than the increase in number of ads delivered has continued. We believe this trend is driven in part by increased usage of Facebook on mobile devices where we have only recently begun showing an immaterial number of sponsored stories in News Feed, and in part due to certain pages having fewer ads per page as a result of product decisions. May 9 Registration Statement, at 57; FWP. The FWP and May 9 Registration Statement led to some media reports on Face-book’s issues with mobile monetization. These stories reported that the migration of Facebook users to its mobile platform was compromising the Company’s ability to generate ad revenue. One report went so far as to warn that there was a possibility Facebook may miss its second quarter projections. On May 9, 10 and 15, after filing the FWP and the May 9 Registration Statement, Herman, Facebook’s Treasurer, made nineteen scripted calls with the Syndicate Analysts (the “Herman Calls”). (CAC ¶ 132.) During these calls, Herman told the Syndicate Analysts that Facebook had sharply reduced the revenue figures that the Company had provided to them three weeks earlier. The script for the Herman Calls stated as follows: I wanted to make sure you saw the disclosure we made in our amended filing. The upshot of this is that we believe we are going to come in [on] the lower end of our $1.1 to $1.2 bn range for Q2 based upon the trends we described in the disclosure. A lot of investors have been focused on whether the trend of ad impressions per user declining (primarily as a result of mobile) was a one-time, or continuing, occurrence. As you can see from our disclosure, the trend is continuing. You can decide what you want to do with your estimates, our long term conviction is unchanged, but in the near term we see these trends continuing, hence our being at the low end of the $1,100 + $1,200 range. {Id. ¶ 133.) The Syndicate Analysts revised their financial models to reflect Facebook’s reduction in its revenue projections: estimates of the Company’s second quarter revenue were cut by as much at 7% and annual revenue as much as 6%. {Id. ¶¶ 135-36.) The Syndicate Analysts immediately provided this new information to some of Facebook’s most important potential investors. {Id. ¶ 137.) The lowered revenue figures raised “a significant red flag” to those investors who received them. {Id. ¶ 139.) Indeed, one hedge fund that was warned by an Underwriter Defendant, Capital Research & Management, concluded that the IPO price of $38 per share was too high. {Id.) Select Syndicate Analysts’ projections were revised for the second quarter as follows: Syndicate Analyst Pre-May 9 Estimate Post-May 9 Revised Estimate Percent Change Goldman Sachs $1,207 billion $1,125 billion -6.79% J.P. Morgan $1.182 billion $1,096 billion -7.27% Morgan Stanley 1 $1,175 billion $1.111 billion -5.45% Bank of America $1,166 billion $1.100 billion -5.66% (CAC ¶¶ 108,136.) Similarly, the projections for the year-end 2012 were revised as follows: Syndicate Analyst Pre-May 9 Estimate Post-May 9 Revised Estimate Percent Change Goldman Sachs 5.169 billion 1852 billion -6.13% J.P. Morgan $5.044 billion $4.839 billion -4.06% Morgan Stanley $4.854 billion -3.61% Bank of America $5.040 billion 1815 billion -4.46% (Id.) Facebook’s reduction in its projections was reported by the media prior to the IPO. Several of these reports only noted that Facebook’s revenue “could be harmed” or that the migration to mobile “may negatively affect” financial results. (CAC ¶¶ 140-41.) However, analysts other than the Syndicate Analysts, who had not been called by Facebook, continued to widely expect Facebook to report revenues in line with Facebook’s original guidance given in April. (Id. ¶ 142.) The consensus estimates for those analysts were for Face-book to report revenues of more than $1.2 billion for the second quarter and $5 billion for the year: a level at or slightly above Facebook’s original guidance. (Id.) The demand for Facebook stock remained high after Facebook released the FWP and May 9 Registration Statement. The high demand allowed Facebook to significantly increase both the size and price of the IPO in the week before the IPO. (CAC ¶ 143-44.) Raising both the price and size of an IPO is a rare occurrence: it has occurred in only 3.4% of all IPOs since 1995. (Id. ¶ 144.) On May 15, 2012, Face-book announced that it was increasing the price range for its stock from a range of $28 to $35 to a new range of $34 to $38. (Id. ¶ 145.) Bloomberg reported that Facebook was able to significantly raise the IPO price because it had succeeded in “convincing investors that [it] can make money from mobile users.” (Id. ¶ 146.) On May 16, 2012, Facebook increased the size of the IPO by nearly 25%, or 84 million shares. (Id. ¶¶ 147-48.) Facebook completed the IPO as scheduled after the close of market on May 17, 2012. (CAC ¶¶ 16, 149.) Defendants sold more than 421 million Facebook IPO shares to the investing public at $38 per share, reaping more than $16 billion in proceeds, making the IPO one of the largest initial public offerings in history. (Id. ¶¶ 4,150.) Financial news analysts reported that the underwriters were releasing significantly more shares to retail investors than previously expected. (Id. ¶ 148.) Facebook stock began publicly trading on May 18, 2012. In the days leading up to the IPO, numerous market commentators predicted that Facebook would experience a large increase in share price on the first day of trading due to large demand. (CAC ¶ 152.) Initially, Facebook’s price did surge as expected, with an opening share price at $42.05. (Id. ¶ 156.) However, soon after investors began to sell, which caused Facebook’s share price to drop close to its $38 IPO price within fifteen minutes of opening. (Id. ¶ 157.) The large drop in Facebook share price forced the Underwriter Defendants to step in and buy millions of shares at $38 a share to ensure that the stock never dipped below that line. (Id. ¶¶ 157-59.) Facebook’s stock closed at $38.23. (Id. ¶ 159.) Facebook’s stock prices fell even further on the next trading day, May 21, 2012. On extremely high trading volume, Facebook stock opened sharply down and closed at $34.03. (Id. ¶¶ 163-64.) Face-book’s stock price dropped again on May 22, closing at $31 per share. (Id. SI 20.) This represented a drop of 18% from Facebook’s initial IPO stock price. (Id.) The slide in share price may have been caused by news reports on Facebook’s adjusted financial projections. On the night of May 18, 2012, Reuters reported that “Facebook [] altered its guidance for research earnings last week, during the road show, a rare and disruptive move.” Following the Reuters report, other financial press reported that the information was highly material and that it fundamentally affected the value of Facebook’s stock. (CAC ¶ 161.) On May 19, 2012, Business Insider noted that for Facebook to reduce its projection guidance “mid-way through a series of meetings designed for the sole purpose of selling the stock” was “highly material information” and that: [S]uch a late change in guidance would mean that Facebook’s business was deteriorating rapidly between the start of the roadshow and the middle of the roadshow. Any time a business outlook deteriorates that rapidly, alarm bells start going off on Wall Street, and stocks plunge. On May 22, 2012, Reuters further reported that the lead underwriters, Morgan Stanley, J.P. Morgan and Goldman Sachs, all had significantly cut their revenue figures for Facebook while the IPO roadshow was underway, a highly unusual move, but only told a few major clients about their adjustment. (CAC ¶ 165.) It is highly unusual for the lead underwriters to significantly cut their revenue figures in the midst of a roadshow. (Id. ¶¶ 166-68.) The CAC alleges that Facebook failed to disclose material information in Facebook’s Registration Statement and other disclosures and the Registration Statement made materially untrue and misleading statements and omissions. Lead Plaintiffs offer two primary theories of liability: (i) Facebook’s failure to disclose whether increasing mobile usage and Facebook’s product decisions had or were reasonably expected to have a material unfavorable impact on revenues and to what extent these trends had or were reasonably expected to impact Facebook’s revenues were omissions or falsities of information required for disclosure by Item 303 of Regulation S-K; and (ii) the Company’s “may” and “if’ statements regarding the impact of the increasing mobile usage and the Company’s product decisions on Face-book’s revenues represented affirmative material misrepresentations. III. Discussion Standard of Review On a motion to dismiss pursuant to Fed. R.CivJP. 12(b)(6), all factual allegations in the complaint are accepted as true, and all inferences are drawn in favor of the pleader. Mills v. Polar Molecular Corp., 12 F.3d 1170, 1174 (2d Cir.1993). “The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.” County of Suffolk, N.Y. v. First Am. Real Estate Solutions, 261 F.3d 179, 187 (2d Cir.2001) (quoting Villager Pond, Inc. v. Town of Darien, 56 F.3d 375, 378 (2d Cir.1995), cert. denied, 519 U.S. 808, 117 S.Ct. 50, 136 L.Ed.2d 14 (1996)). To survive a motion to dismiss pursuant to Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 663, 129 S.Ct. 1937, 1940, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). This is not intended to be an onerous burden, as plaintiffs need only allege facts sufficient in order to “nudge[] their claims across the line from conceivable to plausible.” Twombly, 550 U.S. at 570, 127 S.Ct. 1955. Plaintiffs allege that Defendants violated Sections 11, 12 and 15 of the Securities Act. Section 11 impopes strict liability on issuers and signatories, and negligence liability on underwriters, where “any part of the registration statement, when such part became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading.” 15 U.S.C. § 77k(a). Section 12(a)(2) imposes liability under similar circumstances for misstatements or omissions in a prospectus, on “[a]ny person who ... offers or sells a security ... by means of a prospectus or oral communication, which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements ... not misleading.” 15 U.S.C. § 771 (a)(2). Section 15 of the Securities Act makes a “control person” liable for causing violations of Sections 11 and 12. 15 U.S.C. § 77o; see also Panther Partners v. Ikanos Commc’ns, Inc., 681 F.3d 114, 120 (2d Cir.2012). The CAC does not allege fraud; Lead Plaintiffs instead allege that Facebook acted negligently in preparing its Registration Statement. Neither scienter, reliance nor loss causation is an element of Section 11 or Section 12(a)(2) claims. Id. Section 11 requires only “ordinary notice pleading ... subject only to the ‘short and plain statement’ requirements of Federal Rule of Civil Procedure 8(a).” Litwin v. Blackstone Group, L.P., 634 F.3d 706, 715 (2d Cir.2011). Section 11 and 12(a)(2) claims that do not sound in fraud need not satisfy the heightened particularity requirements of Federal Rules of Civil Procedure 9(b). See In re Morgan Stanley Info. Fund Secs. Litig., 592 F.3d 347, 359 (2d Cir.2010). Accordingly, the heightened pleading standards of the Private Securities Litigation Reform Act do not apply to the CAC. See 15 U.S.C. § 78u-4(b)(l, 2); see also Litwin, 634 F.3d at 715. To survive the motion to dismiss, Plaintiffs need only show negligence under Section 11 or Section 12(a)(2). Id. “Collectively, the language of [S]ections 11 and 12(a)(2) creates three potential bases for liability ... (1) a misrepresentation; (2) an omission in contravention of an affirmative legal disclosure obligation; and (3) an omission of information that is necessary to prevent existing disclosures from being misleading.” In re Morgan Stanley, 592 F.3d at 360. Where such a misrepresentation or omission is identified, the court must then determine whether it is material. See id. The Registration Statement Omitted Material Information The Class Action Complaint alleges that Defendants violated Sections 11 and 12 of the Securities Act by, among other things, failing to disclose the information required by Item 303 of Regulation S-K. (CAC ¶¶ 188(c), 197-201.) Plaintiffs allege that Defendants were required to disclose: (i) whether increasing mobile usage and the Company’s product decisions had or were reasonably expected to have a material unfavorable impact on revenues; and (ii) to what extent those trends had impacted or were reasonably expected to impact Facebook’s revenue. (Id. ¶ 201.) Defendants have challenged the materiality of this information and contend that the Company did disclose this information in the Registration Statement and FWP. Item 303 requires the disclosure of all “known trends ... that have had or that the registrant reasonably expects will have a material ... unfavorable impact on ... revenues.” Regulation S-K, Item 303, 11 C.F.R. § 229.303(a)(3)(ii). According to the SEC’s interpretive release regarding Item 303, “A disclosure duty exists where a trend, demand, commitment, event or uncertainty is both presently known to management and reasonably likely to have material effects on the registrant’s financial condition or results of operation.” Management’s Discussion and Analysis of Financial Condition and Results of Operations, Securities Act Release No. 6835, 54 Fed.Reg. 22427, 22429 (May 18, 1989) (“1989 SEC Release”). “Several specific provisions in Item 303 require disclosure of forward-looking information,” including “where a trend, demand, commitment, event or uncertainty is both [1] presently known to management and [2] reasonably likely to have material effects on the registrant’s financial condition or results of operations.” Id. at 22429; see also Panther Partners, 681 F.3d at 120 (same). Whether a disclosure is required “is based on currently known trends, events, and uncertainties that are reasonably expected to have material effects ... [i]n contrast, optional forward-looking disclosure involves anticipating a future trend or event or anticipating a less predictable impact of a known event, trend or uncertainty.” 54 Fed.Reg. at 22429. Internal forecasts are generally considered “not material facts that are require[d] to be disclosed’ in a registration statement.” In re Facebook, Inc., IPO Secs, and Derivative Litig., 922 F.Supp.2d 445, 472 (S.D.N.Y.2013) (“Derivative Opinion” or “Derivative Op.”) (internal quotation marks emitted) (quoting Sheppard v. TCW/DW Term Trust 2000, 938 F.Supp. 171, 177-78 (S.D.N.Y.1996)); see also In re N. Telecom Ltd. Secs. Litig., 116 F.Supp.2d 446, 458 (S.D.N.Y.2000) (“The federal securities laws do not obligate companies to disclose their internal forecasts.”); Rubke v. Capitol Bancorp Ltd., 551 F.3d 1156, 1163 (9th Cir.2009) (“[TJhere is no duty to disclose income projections in a prospectus.”); In re Burlington Coat Factory Secs. Litig., 114 F.3d 1410, 1432 (3d Cir.1997) (“Companies are not obligated either to produce or disclose internal forecasts.... ”); Glassman v. Computervision Corp., 90 F.3d 617, 631 (1st Cir.1996) (“The federal securities laws impose no obligation upon an issuer to disclose forward-looking information such as internal projections, estimates of future performance, forecasts, budgets, and similar data.”) (quoting Shaw v. Digital Equip. Corp., 82 F.3d 1194, 1209 (1st Cir.1996)); Krim v. BancTexas Group, Inc., 989 F.2d 1435, 1446 (5th Cir.1993) (“[A]n issuer ... has no generalized duty to volunteer an economic forecast.”) (internal quotation marks omitted); In re Salesforce.com Secs. Litig., No. C 04-03009 JSW, 2005 WL 6327481, at *5 (N.D.Cal.2005) (“The law imposes no duty to disclose internal forecasts in the context of an initial public offering.”); In re Donna Karan Int’l Secs. Litig., No. 97-CV-2011 CBA, 1998 WL 637547, at *12 & n. 13 (E.D.N.Y.1998) (“[Plaintiffs essentially seek to hold [the issuer] liable for failing to make projections concerning post-IPO ... costs. Sections 11 and 12(a)(2) do not require such forward-looking disclosures.”). The SEC has not required a general duty to disclose future performance projections and internal valuations because of concerns that such information can be unreliable and misinterpreted by investors. In re Ivan F. Boesky Secs. Litig., 825 F.Supp. 623, 635 (S.D.N.Y.1993). Item 303 similarly does not obligate companies to disclose their internal forecasts. See, e.g., In re Authentidate Holding Corp. Secs. Litig., 2009 WL 755360, at *3 (S.D.N.Y.2009), aff'd in relevant part, 369 Fed.Appx. 260, 265-66 (2d Cir.2010) (no duty under Item 303 to disclose that revenue would likely fail to meet nonpublic revenue targets); In re Donna Karan, 1998 WL 637547, at *10-12 & n. 12 (company was not required “to make projections concerning post-IPO ... costs,” despite allegation that “a negative costs-sales trend,” under Item 303, “existed at the time of the IPO”). Nor does a company have a general duty to disclose changes to internal projections. See, e.g., In re Worlds of Wonder Secs. Litig., 35 F.3d 1407, 1419 (9th Cir.1994) (rejecting Section 11 claim based on the failure “to disclose the extent to which first quarter sales lagged behind ... internal projections”); Glassman v. Computervision Corp., 90 F.3d 617, 631 (1st Cir.1996) (“Plaintiffs’ nondisclosure claims fail because they base their allegations solely on discrepancies between actual (but undisclosed) intraquarterly information and [the company’s] undisclosed internal projections.”); Steckman v. Hart Brewing, Inc., Civil No. 96-1077-K, 1996 WL 881659, at *4 (S.D.Cal.1996) (“[Cjompanies have no duty to disclose intraquarter results, even if those results are lower than the company’s internal projections.”), affd, 143 F.3d 1293 (9th Cir.1998). However, Plaintiffs do not allege that Defendants were required to disclose their internal projections or numerical estimates. Instead, Plaintiffs contend that the Company’s registration statements used language that only suggested there was a possibility that Facebook would have difficulty in the mobile market and that Facebook’s mobile user base was growing faster than its desktop user base when, in reality, these two trends were occurring and affecting Facebook’s advertising revenues. Plaintiffs posit that the loss of revenues caused by the increasing mobile usage was a trend known by Face-book that the Company had a duty to disclose. The SEC requires “material forward-looking information regarding known material trends and uncertainties ... to be disclosed as part of the required discussion of those matters and the analysis of their effects.” Commission Guidance Regarding Management’s Discussion and Analysis of Financial Condition and Results of Operations, Securities Act Release No. 33-8350, 68 Fed.Reg. 75,056, 75,062 (Dec. 29, 2003). “Materiality is an ‘inherently fact-specific finding,’ ... that is satisfied when a plaintiff alleges ‘a statement or omission that a reasonable investor would have considered significant in making investment decisions’ ...” Litwin, 634 F.3d at 716-17 (quoting Basic Inc. v. Levinson, 485 U.S. 224, 236, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988); Ganino v. Citizens Utils. Co., 228 F.3d 154, 161-62 (2d Cir.2000)). “[T]here must be a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.” Id. at 717 (quoting Ganino, 228 F.3d at 162). The Second Circuit recently decided two cases, Litwin and Panther Partners, that provide further illumination on the disclosure obligations under Item 303. Plaintiffs in Litwin alleged that defendant Blackstone violated Sections 11 and 12 of the Securities Act because the registration statement and prospectus for its IPO failed to disclose that (and the extent to which) its future revenues were expected to be impacted by certain developments concerning its business, including: (i) downward trends in the real estate market; (ii) a shift towards a more risky strategy by a subsidiary company, FGIC, which insured mortgage-backed securities; and (iii) another subsidiary, Freescale, had lost its biggest customer. See 684 F.3d at 718-19. The Second Circuit upheld the plaintiffs’ claims and held that Item 303 required more than the mere identification of trends that were occurring in the defendant’s business. The court noted that “the relevant question under Item 303 is whether [the company] reasonably expects the impact to be material.” Litwin, 634 F.3d at 719. [T]he key information that plaintiffs assert should have been disclosed is whether, and to what extent, the particular known trend, event, or uncertainty might have been reasonably expected to materially affect Blackstone’s investments. And this potential future impact was certainly not public knowledge ... and thus cannot be considered part of the “total mix” of information already available to investors. Again, the focus of plaintiffs’ claims is the required disclosures under Item 303 — plaintiffs are not seeking the disclosure of the mere fact of Blackstone’s investment in FGIC, of the downward trend in the real estate market, or of Freescale’s loss of its exclusive contract with Motorola. Rather, plaintiffs claim that Blackstone was required to disclose the manner in which those then-known trends, events, or uncertainties might reasonably be expected to materially impact Blackstone’s future revenues. Id. at 718-19. In holding for the plaintiff, the court emphasized that Blackstone’s real estate segment played a “significant role” in Blackstone’s business and that the alleged misstatements and omissions regarding Blackstone’s real estate “were qualitatively material because they masked a potential change in earnings or other trends.” Id. at 722. “[A]ll Item 303 requires in order to trigger a disclosure obligation [is] a known trend that [defendant] reasonably expected would materially affect its investments and revenues.” Litwin, 634 F.3d at 721. Approximately one year later, the Second Circuit upheld the Litwin panel’s decision in Panther Partners. In Panther Partners, the plaintiffs alleged that the defendants failed to disclose the extent of the impact of known product defects on the company’s financial results in advance of a secondary offering. See 681 F.3d at 114-16. The defendants contended that they had satisfied Item 303 by disclosing the fact that issuer’s products “frequently contain defects and bugs;” that “[i]n the past we have experienced, and may in the future experience, defects and bugs in our products;” and that “[i]f any of our products contains defects [that] could harm our ability to retain existing customers and attract new customers.” See id. at 117. In holding that the plaintiffs did adequately plead a violation of Item 303’s disclosure obligations, the Second Circuit looked not just at the omission alleged by plaintiffs but also at the circumstances surrounding the omission: We believe that, viewed in the context of Item 303’s disclosure obligations, the defect rate [the alleged omission], in a vacuum, is not what is at issue. Rather, it is the manner in which uncertainty surrounding that defect rate, generated by an increasing flow of highly negative information from key customers, might reasonably be expected to have a material impact on future revenues. Id. at 120. In its analysis, the Court noted that “the Registration [s]tatement’s generic cautionary language ... was incomplete and, consequently, did not fulfill [the issuer’s] duty to inform the investing public of the particular, factually-based uncertainties of which it was aware of in the weeks leading up to the [secondary [offering.” Id. at 122. The court noted that the “known uncertainties” related to the defects could have materially impacted revenues: The company’s representation that the product “ ‘frequently contain defects and bugs’ was incomplete and ... did not fulfill [the company’s] duty to inform the investing public of the particular, factually-based uncertainties of which it was aware in the weeks leading up to the Secondary Offering.” Id. In deciding for plaintiffs in Litwin and Panther Partners, the Second Circuit emphasized the issuer’s knowledge of both the trend and uncertainties surrounding the issue disclosed in its registration statement. The operative failure by the issuer in Panther Partners was not its omission of the possibility of the defects and bugs in its products but the omission of the company’s knowledge regarding the uncertainty of the issue. See id. at 121-22 (noting that the issuer “was aware of the ‘uncertainty’ ” of possible returns related to its product’s defects and that such “ ‘known uncertainties’ could materially impact revenues”). Taking Litwin and Panther Partners together, an issuer has a duty to disclose any trend, event or uncertainty that is “known and existing at the time of the IPO” that “was reasonably likely to have a material impact” on the issuer’s financial condition. Panther Partners, 681 F.3d at 121 (quoting Litwin, 634 F.3d at 716). Moreover, an issuer also has a duty to disclose “whether, and to what extent” that known trend, event or uncertainty that “might reasonably be expected to materially impact ... future revenues.” Panther Paitners, 681 F.3d at 121 (quoting Litwin, 634 F.3d at 716). The SEC’s commentary on Item 303 further supports this reading of Litwin and Panther Partners. In its 1989 SEC Release, the SEC stated that if “[m]anagement is unable to determine that a material effect ... is not reasonably likely to occur,” then “MD & A disclosure of the effects of [the known trend, development or uncertainty], quantified to the extent reasonably practicable, would be required.” 54 Fed.Reg. at 22,430; see also 2003 SEC Release, 68 Fed.Reg. at 75,062 (“Quantitative disclosure ... may be required to the extent material if quantitative information is reasonably available.”). The “required disclosure regarding the future impact of presently known trends, events or uncertainties [under Item 303] may involve some prediction or projection.” 1989 SEC Release, 54 Fed.Reg. at 22,429; see also 2003 SEC Release, 68 Fed.Reg. at 75,059 (“In addressing prospective financial condition and operating performance, there are circumstances, particularly regarding known material trends and uncertainties, where forward-looking information is required to be disclosed.”). Thus, the mere identification of a trend is, in some cases, not sufficient disclosure. Facebook’s Registration Statement did note the Company’s potential issues with mobile users and advertisements. The FWP noted that daily active users were increasing more rapidly than the increase in number of ads delivered, that this trend was likely caused by increased usage of Facebook on mobile devices and that growth in use of Facebook through mobile products “may” negatively affect the Company’s revenues. See FWP; see also Registration Statement, at 5. Faeebook’s disclosures denoted a trend, the increase of mobile users, and the uncertainty surrounding the trend, that the increase of mobile users may affect the Company’s revenues. However, two issues arise with the Company’s disclosures in the Registration Statement. First, Facebook used generalized and indefinite terms in the Registration Statement and FWP when describing the impact the increase of mobile users and product decisions could have had on the Company’s revenues and financial results. Such terms fail to constitute sufficient disclosure where Facebook knew of the certainty of the trends in mobile usage. See Panther Partners, 681 F.3d at 117 (discussing the issuer’s registration statement that cautioned in “generalized terms”). The impact of the increase in mobile users on revenues was not alleged to be a mere uncertainty, but a trend Facebook knew was affecting its business revenues. (CAC ¶¶ 122-24); see also, Panther Partners, 681 F.3d at 121; Litwin, 634 F.3d at 718-19. Second, Facebook’s warnings also noted that the increase in mobile users was not the sole variable that could have affected Facebook’s revenues at the time of the IPO. The Registration Statement noted that Facebook’s “revenue trends are also affected by ad inventory management changes affecting the number, size, or prominence of ads we display,” Registration Statement, at 52, and decreasing the number of ads displayed to users did not necessarily lead to a decrease in revenue. The Company, for example, was able to increase the reserve price (or the minimum price threshold) in Facebook’s advertising auction system which reduced the frequency of low quality ads displayed. This caused a reduction in the overall number of ads shown but increased the average price per ad in a way that “the impact on total revenue was minimal.” Registration Statement, at 53. The Registration Statement portrayed Facebook’s product decisions as having an impact on revenue, and an investor could reasonably conclude that an increase in mobile users will not necessarily negatively affect Face-book’s revenues since the Company’s product decisions could offset any lost revenue. Thus, the Registration Statement did not provide the extent increasing mobile users would affect the Company’s overall revenues at a time this trend was already affecting the Company’s revenues as a result of the Company’s product decisions. Facebook should have disclosed more of this relationship to investors. Thus, while Facebook made significant disclosures, including that it “[does] not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven .... [and] if users continue to increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement mone