Shares of MarketWise Inc. experienced a significant downturn on Tuesday following the revelation that the financial-research and analytics company has decided to wind down its Legacy Research business. This decision comes after misconduct by certain managers was uncovered, leading to a reorganization within the company.
Impact on Workforce
Around 104 jobs, which account for approximately 18% of MarketWise’s total workforce, will be affected by this wind down. While some employees may be offered new roles within the company, others could face the unfortunate elimination of their positions.
Timeline for Completion
The reorganization process is expected to conclude within the first half of fiscal 2024. The announcement regarding this strategic move comes just a week after Jon Mikula, a former employee of Legacy Research, was charged with conspiracy to commit securities fraud by federal prosecutors. These charges are related to payments received between December 2019 and August 2021.
Unsurprisingly, the stock market has reacted to this news. The stock symbol MKTW experienced a 5.2% decline during morning trading, reaching a four-month low. As a result, MarketWise’s market capitalization decreased by approximately $36 million, settling at $651.7 million.
Unveiling Internal Communication
Overall, MarketWise Inc. demonstrates its commitment to addressing misconduct within the organization by winding down its Legacy Research business and taking necessary steps to maintain transparency and integrity moving forward.
Legacy Research Facing Consequences Following Ethical Breach
As a result of these grave missteps, Legacy Research’s reputation has suffered irreparable damage. Consequently, the decision has been made to wind down the business’s operations. This choice is not surprising considering the decline in net income experienced by Legacy Research throughout 2023. In the second half of the aforementioned year, net income amounted to approximately $9 million, in stark contrast to the $140 million reported in the third quarter.
These recent developments follow a series of leadership changes within the company. Stansberry assumed the CEO position, succeeding Amber Lee Mason. Furthermore, Mark Gerhard and Rican Hodgson resigned from their positions as board members, while Marco Ferri, Chief Corporate Development Officer, was unexpectedly terminated.
In light of these unfavorable circumstances, Legacy Research’s stock has experienced a decline of 26.8% over the past three months. In comparison, the S&P 500 index has witnessed a notable increase of 12.3%.