MGP Ingredients, Inc.
Lead Plaintiff Deadline: 04/28/2020
SUMMARY OF CASE:
A securities class action has been filed against MGP Ingredients, Inc. (MGPI) on behalf of all purchasers of MGP common stock between February 27, 2019 through February 25, 2020. This case has been filed in the USDC – KS.
The complaint alleges that during the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information concerning MGP’s business and financial condition. Specifically, defendants failed to disclose that MGP had not completed any significant sales of its aged whiskey inventory, the Company had been unable to sell its aged whiskey at the price premium represented to investors, a glut of aged whiskey inventory and shifts in consumer behavior had lowered the value of the Company’s aged whiskey inventory and materially impaired its ability to negotiate significant sales on favorable contract terms, and as a consequence, defendants’ full-year 2019 financial guidance lacked a reasonable basis and was materially misleading. As a result of this information being withheld from the market, the price of MGP common stock was artificially inflated to a high of more than $88 per share during the Class Period.
On May 1, 2019, defendants announced MGP’s first quarter 2019 financial results, including “lighter” than consensus results due to “lower volumes” in sales of aged whiskey, but claimed that MGP was experiencing favorable demand and pricing trends and “confidently confirm[ed]” the Company’s guidance for the remainder of the year. On this news, the price of MGP stock declined nearly 23%. On July 31, 2019, defendants announced weak second quarter 2019 financial results, again due to poor sales of aged whiskey. In addition, defendants affirmed MGP’s net sales growth guidance, but revised downward their guidance for operating income growth. On this news, the price of MGP stock declined more than 25%. On October 31, 2019, defendants announced disappointing third quarter 2019 financial results, again due to poor whiskey sales, and blamed the failure to transact aged whiskey sales on customer delays and “funding issues,” but reiterated that MGP remained on track to achieve its revised full-year 2019 guidance. Following these disclosures, the Company’s stock price declined nearly 12%.
On January 17, 2020, the Company announced its preliminary full-year 2019 financial results, which significantly missed the guidance defendants had reiterated with just two months to go in the year. Following these disclosures, the price of MGP stock declined more than 27% to close at $38.18 per share on January 17, 2020. Then, on February 26, 2020, the Company announced its finalized full-year 2019 financial results, confirming its previously announced preliminary results, including that it had fallen “significantly short of . . . guidance” due to its failure to sell aged whiskey during the fourth quarter of 2019. The Company also revealed that aged whiskey sales had declined year over year and that it had failed to secure the contracts it had previously highlighted to investors. On this news, the price of MGP stock declined 11% to close at $28.42 per share on February 26, 2020, which represented a 67% price decline from the stock’s Class Period high of $88.06 per share.