Inspired Entertainment Faces Stock Plunge and Financial Results Revision

Inspired Entertainment, a gaming-technology company, experienced a significant blow in its stock value after announcing the need to revise over two years of financial results. The stock plunged 41% to reach a low of $6.12 during early trading hours, marking its lowest point since February 2021. Despite a slight recovery to $7.39 by 10 a.m. ET, shares remain down 42% since the beginning of the year.

The New York-based company disclosed on Wednesday evening that it had discovered material weaknesses in its internal controls regarding financial reporting. Furthermore, errors were detected in financial statements dating back to January 2021. These errors primarily relate to Inspired's accounting policies for capitalizing software-development costs.

While the restatement of previous results will take additional time, Inspired reassured investors that it does not anticipate any adverse impact on its cash position or business plan.

To ensure compliance with U.S. law, Inspired is conducting a thorough review of other line items in its financial statements. However, this recent development has led two plaintiff law firms to initiate investigations into potential violations of securities laws.