Sir Walter Scott nailed it eloquently in his comment about the complications engendered by stretching the truth.
CafePress, Inc. operates an e-commerce platform enabling customers to create, buy and sell various customized and personalized products worldwide. On July 30, 2012, CafePress announced net losses of $260,000, or two cents per share, more than double losses of $129,000 in the same quarter a year earlier.
The next trading day, CafePress shares declined more than 40 percent per share, closing at $8.09 per share on unusually heavy volume.
CafePress may or may not have stretched the truth about the company’s financial conditions prior to the announcement. Some investors believe the company fudged certain statements and an investigation is underway to determine whether CafePress’s statements regarding its business, operations and financial condition between March 28, 2012 and July 30, 2012 were false and misleading.
The lesson to take away from this story is that some stakeholders are paying close attention to every statement businesses make. Bad news is best delivered directly and without delay. Minimizing or burying bad news seems to make negative consequences multiply exponentially. Only, Scott said it better.
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