iRobot Corporation Class Action Lawsuit
- Company Name
- iRobot Corporation
- Stock Symbol
- Class Period
- November 21, 2016 to October 22, 2019
- Motion Deadline
- December 23, 2019
- Southern District of New York
On October 24, 2019, the iRobot Corporation class action lawsuit was commenced charging iRobot and certain of its officers with violations of the Securities Exchange Act of 1934. The iRobot class action lawsuit was commenced in the Southern District of New York on behalf of purchasers of iRobot stock between November 21, 2016 and October 22, 2019 (the “Class Period”) and is captioned Miramar Firefighters’ Pension Fund v. iRobot Corporation, No. 1:19-cv-09837.
iRobot is a global consumer robot company that designs and builds robots to assist with household tasks. iRobot’s most popular product line is the Roomba series of robotic vacuum cleaners.
The iRobot class action lawsuit alleges that defendants violated the federal securities laws by making a series of misrepresentations and material omissions concerning the demand for iRobot’s products. Specifically, throughout the Class Period, iRobot reported explosive double-digit revenue growth that it attributed to increasing demand for its Roomba products, expanded gross margin due to distributor acquisitions, greater brand awareness, and technological innovation. In reality, iRobot had been engaged in questionable accounting practices and suspicious related-party transactions to mask slowing growth and the other negative effects of increased competition.
The iRobot class action lawsuit further alleges that iRobot engaged in illicit “channel stuffing” – a deceptive business practice used by a company to inflate its sales and earnings figures by deliberately sending more products to its distributors than they will be able to sell. To conceal its channel stuffing, in 2017, iRobot took the drastic step of purchasing its two major distributors in Europe and Asia. iRobot claimed the acquisitions were undertaken in order to market the Roomba product more effectively and increase margins. However, the true purpose of those acquisitions was to clean up inventory in the channel and to continue masking the decline in demand for iRobot’s products. As a result of these misrepresentations, iRobot shares traded at artificially inflated prices throughout the Class Period, reaching a high of more than $132 per share.
The truth began to be disclosed on April 23, 2019, when iRobot announced quarterly revenues that were below analysts’ expectations and also revealed surging inventory levels. Then on July 23, 2019, iRobot cut its full-year earnings forecast. Finally, on October 22, 2019, iRobot cut the high end of its revenue forecast for the year and once again reported increased inventory levels. The true cause of iRobot’s poor financial guidance was its inability to continue engaging in “channel stuffing” and other misconduct to conceal declining demand for its products. On this news, the price of iRobot stock fell $4.97 per share, or more than 9%, to close at $49.06 per share on October 23, 2019.
The Private Securities Litigation Reform Act of 1995 permits any investor who purchased iRobot stock during the Class Period to seek appointment as lead plaintiff in the iRobot class action lawsuit. A lead plaintiff will act on behalf of all other class members in directing the iRobot class action lawsuit. The lead plaintiff can select a law firm of its choice to litigate the iRobot class action lawsuit. An investor’s ability to share in any potential future recovery of the iRobot class action lawsuit is not dependent upon serving as lead plaintiff. If you wish to serve as lead plaintiff of the iRobot class action lawsuit or have questions concerning your rights regarding the iRobot class action lawsuit, please provide your information here or contact counsel, Brian E. Cochran of Robbins Geller at 800/449-4900 or 619/231-1058, or via e-mail at email@example.com. Lead plaintiff motions for the iRobot class action lawsuit must be filed with the court no later than December 23, 2019.
Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities class action litigation. With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history. For six consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements. Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims. Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide. Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry.