BOCA RATON, Fla., March 22, 2024 (GLOBE NEWSWIRE) -- Saxena White P.A. has filed a securities fraud class action lawsuit (the “Class Action”) in the United States District Court for the Middle District of Tennessee against Shoals Technologies Group, Inc. (“Shoals” or the “Company”) (NASDAQ: SHLS) and certain of its executive officers (collectively, “Defendants”). The Class Action asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and U.S. Securities and Exchange Commission (“SEC”) Rule 10b-5 promulgated thereunder on behalf of all persons and entities that purchased Shoals common stock between May 17, 2022 and November 7, 2023, inclusive (the “Class Period”), and were damaged thereby (the “Class”). The Class Action filed by Saxena White P.A. is captioned: Westchester Putnam Counties Heavy & Highway Laborers Local 60 Benefits Fund v. Shoals Technologies Group, Inc. et al., No. 3:24-cv-00334 (M.D. Tenn.).
Shoals, which is headquartered in Portland, Tennessee, purports to be a leading provider of electrical balance of systems (“EBOS”) products used in generating solar power, among other uses. Throughout the Class Period, Defendants touted the Company’s “focus on quality and reliability” with regard to its EBOS components, backed up by a warranty Shoals provided customers for its products. Shoals further highlighted that its products met “stringent quality requirements” and assured investors throughout the Class Period that its reported “Cost of Revenue” included costs related to product warranty liability. In reality, by no later than March 2022, Shoals learned of customers experiencing excessive pull back of wire insulation, or “shrinkback,” in wire harnesses used in the EBOS products.
The Class Action alleges that, during the Class Period, Defendants made materially false and misleading statements and failed to disclose material adverse facts about the Company’s business, operations, and prospects in violation of the Exchange Act and SEC Rule 10b-5. Specifically, Defendants failed to disclose that: (1) Shoals did not deliver EBOS products that met the highest levels of quality and reliability; (2) Shoals had received reports of exposed copper conduit in EBOS wire harnesses in a large number of solar fields and was aware that a significant portion of its wire harnesses had defects; (3) Shoals would have to incur between $60 million to $185 million in costs to remediate the wire shrinkback issue; and (4) Shoals had understated its cost of revenue by millions of dollars. As a result, Defendants’ positive statements about the Company’s financial guidance, business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.
The truth was revealed after the close of markets on November 7, 2023. That day, Shoals filed its Quarterly Report on Form 10-Q for the third quarter of 2023 with the SEC and held an accompanying earnings call in which Defendants revealed that the wire shrinkback issue was far more severe than previously disclosed. Specifically, the Company reported that the shrinkback issue affected 30% of Shoals’ harnesses installed between 2020 and 2022, booked a $50.2 million warranty expense for the quarter related to the shrinkback issue, and provided a range of potential loss related to the shrinkback issue of $59.7 million to $184.9 million. In reaction to these revelations, the price of Shoals’ stock dropped $3.28 per share, or more than 20%, over the next two trading days, from a closing price of $16.23 per share on November 7, 2023 to a closing price of $12.95 per share on November 9, 2023, wiping out approximately $550 million in market capitalization.
If you purchased Shoals common stock during the Class Period and were damaged thereby, you are a member of the “Class” and may be able to seek appointment as lead plaintiff. If you wish to apply to be lead plaintiff, a motion on your behalf must be filed with the U.S. District Court for the Middle District of Tennessee no later than May 21, 2024. The lead plaintiff is a court-appointed representative for absent members of the Class. You do not need to seek appointment as lead plaintiff to share in any Class recovery in the Class Action. If you are a Class member and there is a recovery for the Class, you can share in that recovery as an absent Class member.
You may contact Marco A. Dueñas (mduenas@saxenawhite.com), an attorney at Saxena White P.A., to discuss your rights regarding the appointment of lead plaintiff or your interest in the Class Action. You also may retain counsel of your choice to represent you in the Class Action. You may obtain a copy of the Complaint and inquire about actively joining the Class Action at www.saxenawhite.com.
Saxena White P.A., with offices in Florida, New York, California, and Delaware, is a leading national law firm focused on prosecuting securities class actions and other complex litigation on behalf of injured investors. Currently serving as lead counsel in numerous securities fraud class actions nationwide, Saxena White has recovered billions of dollars on behalf of injured investors.
CONTACT INFORMATION
Marco A. Dueñas, Esq.
mduenas@saxenawhite.com
Saxena White P.A.
10 Bank Street, Suite 882
White Plains, New York 10606
Tel.: (914) 437-8551
Fax: (888) 631-3611
www.saxenawhite.com
