A class action lawsuit has placed Dow Inc under intense scrutiny, with allegations that the chemical giant misrepresented the security of its dividend and overall financial health. As the company contends with persistent weak demand and elevated energy expenses, its shares continue their downward trajectory, raising questions about its ability to reverse the decline.
Financial Performance Fuels Investor Anxiety
The legal challenges emerge against a backdrop of severe financial strain. During the second quarter of 2025, Dow reported disappointing earnings, posting a loss of $0.42 per share—significantly worse than the anticipated loss of $0.16 per share. Revenue declined by 7% to $10.1 billion. This triggered a dramatic 16% plunge in the stock price before markets even opened. The equity currently trades approximately 60% below its 52-week peak and has surrendered more than half its value since the start of the year.
Core Allegations of the Lawsuit
Legal representatives allege that Dow overstated its resilience to macroeconomic headwinds and trade tariffs, while simultaneously downplaying the severe impacts of competitive pressures and softening demand. A particularly damaging claim centers on the company’s dividend, with the lawsuit challenging whether the payout was ever on solid financial footing. This accusation gains credibility from the company’s recent decision to slash its dividend by 50% in the third quarter.
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Strategic Moves to Navigate Challenges
Despite the overwhelmingly negative news flow, Dow is taking strategic actions to stabilize its position. The corporation has generated approximately $3 billion from the divestiture of its stake in Diamond Infrastructure Solutions. Furthermore, it anticipates an additional $1.62 billion in the fourth quarter from a damages settlement. Concurrently, the company is shuttering three European facilities as part of a broader initiative to align regional capacity and enhance profit margins.
A Pivotal Moment Approaches
The coming weeks are critical for Dow and its shareholders. All eyes are on the third-quarter earnings report scheduled for October 23. This release comes just five days before a crucial deadline in the class action lawsuit on October 28. The financial update will either serve to contradict the pessimistic forecasts or validate the plaintiffs’ gravest concerns, leaving investors in a race against time.
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