Romeo Power Inc.
Lead Plaintiff Deadline: 06/15/2021
SUMMARY OF CASE:
A securities class action has been filed against Romeo Power Inc. (RMO) on behalf of all persons and entities who purchased the publicly traded securities of Romeo during the period between October 5, 2020 through March 30, 2021. This case has been filed in the USDC – S.D.N.Y.
The Complaint alleges that on December 29, 2020, Romeo announced that it completed its business combination with RMG. The business combination was approved by RMG stockholders in a special meeting held on December 28, 2020 and consummated on December 29, 2020.
The Complaint further alleges that Defendants represented that for 2020 Romeo estimated revenue of $11 million, and for 2021 Romeo estimated revenue of $140 million. The Complaint further alleges that Defendants represented that Romeo had the capacity and supply to meet end-user demand for Romeo’s products, that Romeo was not beholden “to any level of the value chain”, that its supply was hedged, and that they did not see any material challenges that would hamper growth.
The Complaint further alleges that during the Class Period, unknown to investors, Romeo was suffering from an acute shortage of high quality battery cells, which are key raw materials for Romeo’s battery packs and modules, due to supply constraints. Contrary to Defendants’ representations, (i) Romeo had only two battery cell suppliers, not four, (ii) the future potential risks that Defendants warned of concerning supply disruption or shortage had already occurred and were already negatively affecting Romeo’s business, operations and prospects, (iii) Romeo did not have the battery cell inventory to accommodate end-user demand and ramp up production in 2021, (iv) Romeo’s supply constraint was a material hindrance to Romeo’s revenue growth, and (v) Romeo’s supply chain for battery cells was not hedged, but in fact, was totally at risk and beholden to just two battery cell suppliers and the spot market for their 2021 inventory. Given the supply constraint that Romeo was experiencing during the Class Period, Defendants had no reasonable basis to represent that the Company had the ability to meet customer demand and that it would support growth in revenue in 2021.
When the true details entered the market on March 31, 2021, Romeo shares declined from a closing price on March 30, 2021 of $10.37 per share to close at $8.33 per share, a decline of $2.04 per share, or almost 20%, on heavier than usual volume of over 20 million shares.