Backblaze: Accounting Fraud, Insider Trading, and the Downfall of a Cloud Storage Startup
Backblaze, a $250 million cloud storage and backup solution provider, has been plagued by losses and a plummeting stock price (down 71% since its 2021 IPO). Two former senior employees have filed lawsuits alleging accounting fraud, inflated projections, and whistleblower retaliation. The suits claim founders breached fiduciary duty by aggressively selling shares after the IPO lock-up, driving the stock down. Further allegations include manipulating financial statements to inflate cash flow forecasts and hide an internal investigation. Executives allegedly continued selling shares despite knowing the financial information was inaccurate. Backblaze's new CFO also comes from a poorly performing company. Competitor Wasabi is rapidly gaining market share. This report concludes that Backblaze is a failed growth business with serious financial and product competitiveness issues.
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