A class action lawsuit has been filed against Rivian, alleging the automaker failed to disclose important information to investors.
Filed in the United States District Court for the Central District of California this week, the suit claims Rivian violated the Securities Exchange Act of 1934, and covers investors who acquired Rivian stock between March 1, 2023, and February 21, 2024.
The lawsuit alleges Rivian was overly optimistic about product demand amid a high interest rate environment. The complaint argues that Rivian did not fully disclose the extent to which its order book was declining with reduced demand and a high rate of cancellations of existing orders.
According to the law firm Bragar Eagel & Squire, P.C., which filed the suit, the implications of these alleged misrepresentations became evident when Rivian announced its Q4 2023 and full year earnings. The company’s announcement included a production forecast of 57,000 vehicles for 2024, a number significantly below the 80,000 vehicles anticipated by analysts. Additionally, Rivian projected an adjusted EBITDA loss of $2.7 billion for the year, which also did not meet analyst expectations.
Rivian also announced it was laying off 10% of its salaried workforce, attributing the cuts to current economic uncertainties.
As a result of this news, Rivian’s stock price suffered a significant drop, falling by 25.6% the day following the earnings announcement. The company’s share price has fallen by nearly 60% this year alone.
