Bragar Eagel & Squire, P.C. Reminds Investors That Class Action Lawsuits Have Been Filed Against Lordstown Motors, Root, Vroom, and Repro Med and Encourages Investors to Contact the Firm

Thursday, 06. May 2021 04:21

NEW YORK, May 05, 2021 (GLOBE NEWSWIRE) -- Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, reminds investors that class actions have been commenced on behalf of stockholders of Lordstown Motors Corp. (NASDAQ: RIDE), Root, Inc. (NASDAQ: ROOT), Vroom, Inc. (NASDAQ: VRM), and Repro Med Systems, Inc. d/b/a KORU Medical Systems (NASDAQ: KRMD). Stockholders have until the deadlines below to petition the court to serve as lead plaintiff. Additional information about each case can be found at the link provided.

Lordstown Motors Corp. (NASDAQ: RIDE)

Class Period: August 3, 2020 to March 24, 2021

Lead Plaintiff Deadline: May 17, 2021

According to its website, Lordstown is an automotive company founded for the purpose of developing and manufacturing light duty electric trucks targeted for sale to fleet customers. The Company’s purported flagship vehicle is the “Endurance,” an electric full-size pickup truck.

On March 12, 2021, analyst Hindenburg Research published a scathing report on Lordstown entitled: “The Lordstown Motors Mirage: Fake Orders, Undisclosed Production Hurdles, and a Prototype Inferno.” In this report, Hindenburg noted that Lordstown has “no revenue and no sellable product,” and wrote that the Company “has misled investors on both its demand and production capabilities.” The Hindenburg report concluded that Lordstown’s “orders are largely fictitious and used as a prop to raise capital and confer legitimacy,” and that a former employee “explained how the company is experiencing delays and making ‘drastic’ design modifications, putting [Lordstown] an estimated 3-4 years away from production,” rather than the Company being “on track” for a September 2021 production start.

On this news, the price of Lordstown common stock fell approximately 16.5% in one day, down from its March 11, 2021 closing price of $17.71 to a March 12, 2021 close of just $14.78. This represents hundreds of millions of dollars in lost market capitalization.

Then on March 17, 2021, after trading had closed, the Company held an earnings call disclosing that Lordstown had received an inquiry from the SEC. Remarkably, although Lordstown also issued a press release and a Form 8-K announcing its fourth quarter and full year 2020 financial results after trading closed on March 17, 2021, the Company failed to disclose the existence of the SEC inquiry in those filings.

On this news, the stock fell approximately another 9% in aftermarket trading.

The complaint, filed on March 18, 2021, alleges that throughout the Class Period defendants made materially false and misleading statements regarding the Company’s business. Specifically, defendants made false and/or misleading statements and/or failed to disclose that: (i) the Company’s purported pre-orders were non-binding; (ii) many of the would-be customers who made these purported pre-orders lacked the means to make such purchases and/or would not have credible demand for Lordstown’s Endurance; (iii) Lordstown is not and has not been “on track” to commence production of the Endurance in September 2021; (iv) the first test run of the Endurance led to the vehicle bursting into flames within 10 minutes; and (v) as a result, the Company’s public statements were materially false and misleading at all relevant times.

For more information on the Lordstown Motors class action go to: https://bespc.com/cases/RIDE

Root, Inc. (NASDAQ: ROOT)

Class Period: Securities purchased between October 28, 2020 and March 8, 2021, both dates inclusive (the “Class Period”); and/or Root Class A common stock pursuant and/or traceable to the offering documents issued in connection with the Company’s initial public offering conducted on or about October 28, 2020 (the “IPO” or “Offering”).

Lead Plaintiff Deadline: May 18, 2021

On October 5, 2020, Root filed a registration statement on Form S-1 with the SEC in connection with the IPO, which, after several amendments, was declared effective on October 27, 2020 (the “Registration Statement”). On October 28, 2020, Root conducted the IPO, selling 26.8 million shares of the Company’s Class A common stock to the public at $27.00 per share for total approximate proceeds of $724.43 million. 

On March 9, 2021, Bank of America (“BofA”) Securities analyst Joshua Shanker (“Shanker”) initiated coverage of Root with an “Underperform” rating on the premise that the Company is unlikely to be cash flow positive until 2027, finding that Root “will require not insignificant cash infusions from the capital markets to bridge its cash flow needs.” Shanker also noted that insurers Progressive, Allstate, and Berkshire Hathaway’s Geico would continue to impede the Company’s profitability, with Progressive and Allstate having a “sizable advantage over Root in terms of amount of [telematics] data as well as engagement with the data” used to price their auto insurance.

On this news, Root’s stock price fell $0.18 per share, or 1.46%, to close at $12.17 per share on March 9, 2021, representing a total decline of 54.93% from the Offering price.

The complaint, filed on March 19, 2021, alleges that the offering documents were negligently prepared and, as a result, contained untrue statements of material fact or omitted to state other facts necessary to make the statements made not misleading and were not prepared in accordance with the rules and regulations governing their preparation. Additionally, throughout the Class Period, defendants made materially false and misleading statements regarding the Company’s business, operations, and compliance policies. Specifically, the offering documents and defendants made false and/or misleading statements and/or failed to disclose that: (i) Root would foreseeably fail to generate positive cash flow for at least several years following the IPO; (ii) accordingly, the Company would foreseeably require significant cash infusions to meet its cash flow needs; (iii) notwithstanding the defendants’ touting of Root’s purportedly unique, data-driven advantages, several of the Company’s established industry peers in fact possessed significant competitive advantages over Root with respect to, inter alia, telematics data and data engagement; and (iv) as a result, the offering documents and defendants’ public statements throughout the Class Period were materially false and/or misleading and failed to state information required to be stated therein.

For more information on the Root class action go to: https://bespc.com/cases/ROOT

Vroom, Inc. (NASDAQ: VRM)

Class Period: June 9, 2020 to March 3, 2021

Lead Plaintiff Deadline: May 21, 2021

On March 3, 2021, Vroom announced its fourth quarter and full year 2020 financial results in a press release. Therein, the Company reported that fourth quarter “Ecommerce Vehicle gross profit per unit decreased 13.1% to $878, driven primarily by lower sales margins, partially offset by improvements in inbound logistics and reconditioning costs per unit.” Vroom also reported that for the fourth quarter, its “[n]et loss increased 41.9% to $60.7 million.”

On this news, the Company’s stock price fell $12.29 per share, or 27.9%, to close at $31.61 per share on March 4, 2021.

The complaint, filed on March 22, 2021, alleges that throughout the Class Period defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, defendants failed to disclose to investors: (1) that Vroom had not demonstrated that it was able to control and scale growth in respect to its salesforce to meet the demand for its products; (2) that, as a result, the Company was forced to discount aged inventory to move through its retail channels or liquidated in its wholesale channels; (3) that, as a result, the ecommerce gross profit per unit was reasonably likely to decline; and (4) that, as a result of the foregoing, defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.

For more information on the Vroom class action go to: https://bespc.com/cases/VRM

Repro Med Systems, Inc. d/b/a KORU Medical Systems (NASDAQ: KRMD)

Class Period: August 4, 2020 to January 25, 2021

Lead Plaintiff Deadline: May 25, 2021

KORU designs, manufactures, and markets proprietary portable medical devices, primarily for the ambulatory infusion market.

On November 3, 2020, after the market closed, KORU announced its third quarter 2020 financial results, reporting that net sales declined sequentially to $6.1 million. During the conference call the next day, the Company attributed the lower sales to, among other things, “higher allowances for gross rebates for certain customers” and “payment discounts and distribution fees.”

On this news, the Company’s stock fell $1.97, or 32%, to close at $4.16 per share on November 4, 2020.

On January 25, 2021, after the market closed, KORU announced its preliminary financial results for fiscal 2020, expecting revenue of approximately $24.0 million, an increase of 3.4% over the prior year. The Company attributed the results to, among other things, “[s]lower growth in net revenue as a result of strengthening our contractual position with large customers.” In the press release, KORU also announced that its CEO, Donald Pettigrew, resigned, effective immediately.

On this news, KORU’s stock price fell $0.80 per share, or 15.5%, to close at $4.33 per share on January 26, 2021.

The complaint, filed on March 26, 2021, alleges that throughout the Class Period defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, defendants failed to disclose to investors that: (1) starting in January 2020, KORU ramped up the use of allowances, including growth rebates, to retain key customers and to incentivize growth; (2) as the rebates accrued, the Company’s net sales were reasonably likely to decline; and (3) as a result of the foregoing, defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.

For more information on the Repro Med class action go to: https://bespc.com/cases/KRMD

About Bragar Eagel & Squire, P.C.:
Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York, California, and South Carolina. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.

Contact Information:
Bragar Eagel & Squire, P.C.
Brandon Walker, Esq.
Melissa Fortunato, Esq.
Marion Passmore, Esq.
(212) 355-4648
investigations@bespc.com
www.bespc.com


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