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NEW YORK, June 14, 2021 (GLOBE NEWSWIRE) -- Pomerantz LLP announces that a class action lawsuit has been filed 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 the United States District Court for the Southern District of New York, and docketed under 21-cv-04058, is on behalf of a class consisting of all persons and entities other than Defendants who purchased or otherwise acquired the publicly traded securities of Romeo between October 5, 2020 through March 30, 2021, inclusive (the “Class Period”). Plaintiff pursues claims against the Defendants under the Securities Exchange Act of 1934 (the “Exchange Act”).
If you are a shareholder who purchased Romeo securities during the Class Period, you have until June 15, 2021 to ask the Court to appoint you as Lead 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 firstname.lastname@example.org or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
The complaint alleges that, throughout the Class Period, Defendants represented that for 2020 Romeo estimated revenue of $11 million, and for 2021 Romeo estimated revenue of $140 million. Defendants further represented that Romeo had “key partnerships” and close relationships with LG Chem, Samsung, Murata and SK Innovation, which manufacture battery cells, a key component in Romeo’s battery modules and packs and that they were supplying Romeo with battery cells. Furthermore, 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 it did not see any material challenges that would hamper growth.
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, because of 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.
On 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 year ended December 31, 2020, and conducted a conference call with investors and analysts. Defendants shocked investors by disclosing that the Company’s production had been hampered by a shortage in supply of battery cells and that its estimated 2021 revenue would therefore be reduced by approximately 71-87%.
During a conference call with investors after the disclosure of Romeo’s financial results and projected results, Defendant Lionel E. Selwood, Jr. (“Selwood, Jr.”) disclosed that the Company had been relying solely on Samsung and LG for its supply of power cells.
On March 31, 2021, Morgan Stanley issued a research report in which it downgraded Romeo’s target price per share from $12 to $7.
Also 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.
The Pomerantz Firm, with offices in New York, Chicago, Los Angeles, and Paris is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com
Robert S. Willoughby
888-476-6529 ext. 7980