Latch: IPO Hype, 2 Years of Accounting Errors, and 12% Stock Drop— What Went Wrong For Them?

Court: S.D. New York

Case: 1:22-cv-07473

If you followed Latch’s journey since its public debut, you probably remember the issues with its financial reporting and revenue recognition. If not, here’s a recap of what happened—and the latest updates for investors.

A Promising Debut

When LTCH debuted on the stock market in June 2021, the company positioned itself as a leader in smart building technology, offering innovative security and access control solutions for apartment complexes and commercial buildings.

During its public debut, Latch reassured investors that it had strong revenue performance and projected significant growth. Management emphasized that demand for its products was increasing and that its financial health remained strong.

But just over a year later, in August 2022, Latch publicly admitted that its financial reporting had serious flaws. The company disclosed that it had improperly accounted for hardware sales, which meant the revenue figures investors had relied on were inaccurate.

Latch announced that it would need to restate its financial statements for 2021 and the first quarter of 2022 due to these errors.

When Reality Hit the Share Price

As soon as Latch disclosed these accounting problems, LTCH dropped 12%, and investors filed a lawsuit against the company for their losses.

Fixing the Past, Facing the Future

After more than two years of legal proceedings, Latch has agreed to settle $1.95M to compensate affected investors. And even though the deadline has passed, they're accepting late claims. You can check the details and file for payment here.

Following the financial scandal, Latch has faced continued challenges. The company’s stock remains significantly below its IPO price. However, Latch has taken steps to address its financial reporting issues, including restructuring its internal accounting processes.

With the lawsuit now behind it, the company will need to rebuild trust with investors and focus on stabilizing its business operations.