NEW YORK, June 11, 2021 / PRNewswire / – Pomerantz LLP Announces Class Action Against Romeo Power, Inc. (“Romeo” or the “Company”) (f / k / a RMG Acquisition Corp.) (NYSE: RMO) and certain of its officers. The class action, filed in United States District Court of the Southern District of new York, and listed under 21-cv-04058, is in the name of a class consisting of all persons and entities other than the Defendants who have purchased or otherwise acquired the listed securities of Romeo between October 5, 2020 through March 30, 2021, inclusive (the “Recourse Period”). The plaintiff is pursuing actions against the defendants under the Securities Exchange Act of 1934 (the “Exchange Act”).
If you are a shareholder who purchased securities of Romeo during the Class Period, you have up to June 15, 2021 ask the court to appoint you as the principal plaintiff for the class. A copy of the complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll free, Ext. 7980. Those inquiring by e-mail are encouraged to provide their mailing address, telephone number and the number of shares purchased.
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The complaint alleges that, throughout the period of the action, the defendants stated that for 2020, Romeo estimated the income of $ 11 million, and for 2021 Romeo estimates a turnover of $ 140 million. The defendants further stated that Romeo has “key partnerships” and close relationships with LG Chem, Samsung, Murata and SK Innovation, which manufacture battery cells, a key part of Romeo’s battery modules and packs, and that they supplied Romeo with battery cells. In addition, the defendants stated that Romeo had the capacity and supply to meet end-user demand for Romeo’s products, that Romeo was not beholden “at any level of the value chain”, that its supply was covered and did not see any significant challenges that would hinder growth.
Unbeknownst to investors, Romeo was suffering from an acute shortage of high-quality battery cells, which are essential raw materials for Romeo’s battery packs and modules, due to supply constraints. Contrary to the statements of the defendants: (i) Romeo only had two suppliers of battery cells, not four; (ii) potential future risks of which the Defendants warned regarding a supply disruption or shortage had already occurred and were already adversely affecting Romeo’s business, operations and prospects; (iii) Romeo did not have the stock of battery cells to meet end user demand and increase production in 2021; (iv) Romeo’s supply constraint was a significant obstacle to Romeo’s revenue growth; and (v) Romeo’s supply chain for battery cells was not covered, but in fact was totally threatened and indebted to just two battery cell suppliers and the cash market for their 2021 inventory. Given the supply constraint experienced by Romeo during the Class Period, the Defendants had no reasonable basis for asserting that the Company had the capacity to meet customer demand and that it would support revenue growth in 2021. .
At March 30, 2021, after the market closed, Romeo issued a press release and filed a report with the United States Securities and Exchange Commission on Form 8-K that disclosed its financial results for the quarter and fiscal year ended December 31, 2020, and hosted a conference call with investors and analysts. The defendants shocked investors by revealing that the company’s production had been hampered by a shortage of battery cells and that its estimated revenues for 2021 would therefore be reduced by about 71 to 87 percent.
In a conference call with investors following the disclosure of Romeo’s financial results and projected results, the defendant Lionel E. Selwood, Jr. (“Selwood, Jr.”) revealed that the company relied solely on Samsung and LG for its supply of power cells.
At March 31, 2021, Morgan Stanley published a research report in which it lowered the target price per share of Romeo from $ 12 at $ 7.
Also on March 31, 2021, the Romeo share fell from a closing price on March 30, 2021 of $ 10.37 per share to close at $ 8.33 per share, a decrease of $ 2.04 per share, or nearly 20%, on a larger than usual volume of more than 20 million shares.
The Pomerantz firm, with offices in new York, Chicago, Los Angeles, and Paris is recognized as one of the leading firms in the areas of corporate law, securities and antitrust litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz was a pioneer in the field of class actions in securities. Today, more than 80 years later, Pomerantz continues the tradition it established, fighting for the rights of victims of securities fraud, breach of fiduciary duty and professional misconduct. The firm has recovered numerous multi-million dollar damages on behalf of the members of the group. See www.pomerantzlaw.com
Robert S. Willoughby
888-476-6529 ext 7980
SOURCE Pomerantz LLP