Backblaze Investors Face Class Action Crossroads: How Financial Allegations Could Reshape Shareholder Fate

The recent surge in legal activity surrounding Backblaze, Inc. (NASDAQ: BLZE) has thrust investors into a critical decision point. With two prominent law firms—Rosen Law Firm and The Schall Law Firm—actively pursuing securities class action investigations, shareholders now face a complex landscape of risks and potential recovery opportunities. This article examines the allegations, stock performance implications, and strategic considerations for investors.

The Catalyst: Morpheus Research’s 2024 "Scathing" Report

At the heart of the legal storm is a Morpheus Research report, published on April 24, 2024, which accused Backblaze of engaging in questionable accounting practices, inflated forecasts, and financial manipulations since its November 2021 IPO. The report alleged that the company falsified documents to bypass internal controls and used unapproved third-party warehouses to meet audit thresholds. While the report initially caused minor market reactions, renewed attention in April 2025 triggered a 2.1% stock drop on April 24, 2025, as shown below:

Legal Landscape: Rosen vs. Schall—Choosing the Right Advocate

Both Rosen Law Firm and The Schall Law Firm are vying to represent shareholders in potential class actions. Here’s a breakdown of their approaches:

Rosen Law Firm

• Focus: Claims Backblaze issued materially misleading information, including inflated financial metrics.
• Track Record: Highlights its role in the largest securities class action settlement against a Chinese company, a $438 million recovery in 2019, and a No. 1 ranking by ISS Securities Class Action Services in 2017.
• Action: Shareholders can join via
  rosenlegal.com or by contacting Phillip Kim at 866-767-3653.

The Schall Law Firm

• Focus: Investigating whether Backblaze withheld critical information about its financial practices.
• Global Reach: Specializes in cross-border securities litigation, representing investors worldwide.
• Action: Contact Brian Schall at 310-301-3335 or visit
  www.schallfirm.com.

Key Takeaway: While both firms operate on a contingency fee basis (no upfront costs), their track records and geographic focus may influence investor choices.

Stock Performance: Volatility Amid Legal Uncertainty

The April 24, 2025, stock drop was not isolated. That day, BLZE shares opened at $4.60 but plunged to a $3.94 intraday low, a 14.1% drop, before closing at $4.47. Trading volume surged to 2.8 million shares—over six times the next day’s volume—reflecting panic selling. However, the stock stabilized slightly on April 25, closing at $4.51 (+0.89%).

This volatility underscores the market’s skepticism toward Backblaze’s financial credibility. Investors should note:
- The low price of $3.94 on April 24 suggests a potential buying opportunity, but risks remain tied to ongoing investigations.
- Volume spikes often precede further corrections or rebounds, depending on legal outcomes.

Investor Considerations: Timing and Strategy

1. Deadline Awareness: Class action participation deadlines are critical. Missing them could forfeit eligibility for recovery.
2. Due Diligence on Law Firms: Not all firms with press releases have meaningful litigation success. Rosen Law’s history of landmark settlements provides credibility, while Schall’s global focus may appeal to international investors.
3. Cost-Benefit Analysis: Contingency fees mean no upfront costs, but recovery amounts depend on the case’s strength and settlement terms.

Conclusion: Navigating the Crossroads

Backblaze investors now stand at a pivotal juncture. The Morpheus allegations—if substantiated—could lead to significant settlements, benefiting shareholders who act swiftly. However, the legal process is uncertain:
- Risks: Further stock declines if investigations uncover deeper issues.
- Opportunities: A potential recovery of losses, with Rosen Law’s track record suggesting a $438 million recovery in 2019 as a benchmark.

The stock’s April 2025 volatility highlights market skepticism, but the $3.94 low may present a buying opportunity for investors willing to ride out legal risks. For those seeking compensation, joining a class action led by a proven firm like Rosen Law or Schall Law is essential.

As the saying goes, “Time and tide wait for no man”—and neither do securities deadlines. Backblaze shareholders must act promptly to secure their rights in what could be a defining chapter for the company.