Red Cat Holdings, Inc. Class Action Lawsuit - RCAT
Case Summary
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The Red Cat class action lawsuit seeks to represent purchasers or acquirers of Red Cat Holdings, Inc. (NASDAQ: RCAT) securities between March 18, 2022 and January 15, 2025, inclusive (the “Class Period”). Captioned Olsen v. Red Cat Holdings, Inc., No. 25-cv-05427 (D.N.J.), the Red Cat class action lawsuit charges Red Cat and certain of Red Cat’s top current and former executives with violations of the Securities Exchange Act of 1934.
If you suffered substantial losses and wish to serve as lead plaintiff of the Red Cat class action lawsuit, please provide your information in the form on this page. You can also contact attorney J.C. Sanchez or Jennifer N. Caringal of Robbins Geller by calling 800/449-4900 or via e-mail at info@rgrdlaw.com. Lead plaintiff motions for the Red Cat class action lawsuit must be filed with the court no later than July 22, 2025.
CASE ALLEGATIONS: Red Cat, together with its subsidiaries, provides products and solutions to drone industry. Red Cat’s products include, among others, the “Teal 2” drone, a small, unmanned aircraft system designed to purportedly “Dominate the Night” during nighttime military operations.
The Red Cat class action lawsuit alleges that defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose that: (i) Red Cat’s Salt Lake City facility’s production capacity, and defendants’ progress in developing the same, was overstated; and (ii) the overall value of Red Cat’s Short Range Reconnaissance Program of Record Tranche 2 contract (the “SRR Contract”) was overstated.
The Red Cat class action lawsuit further alleges that on July 27, 2023, Red Cat revealed that its Salt Lake City facility could only currently produce 100 drones per month, the facility was still being built, refined, and expanded, and that construction of the facility was only “substantially completed” and potentially could reach a production capacity of 1,000 drones per month over the next 2 to 3 years, but only with additional capital investments and manufacturing efficiencies realized. On this news, the price of Red Cat stock fell nearly 9%, according to the complaint.
Then, on September 23, 2024, the Red Cat class action lawsuit further alleges that Red Cat announced its financial results for the first quarter of fiscal year 2025, reporting losses per share of $0.17, missing consensus estimates by $0.09, and revenue of $2.8 million, missing consensus estimates by $1.07 million. According to the complaint, Red Cat further disclosed that Red Cat had spent “the past four months . . . retooling [the Salt Lake City facility] and preparing for high volume production,” while admitting that a “pause in manufacturing of Teal 2 and building Army prototypes impacted Teal 2 sales” because, among other things, Red Cat “couldn’t produce and sell Teal 2 units while retooling [its] factory.” The Red Cat class action lawsuit alleges that on this news, the price of Red Cat stock fell more than 25%.
Finally, the Red Cat class action lawsuit further alleges that on January 16, 2025, Kerrisdale Capital published a report alleging that “[t]he SRR contract that Red Cat won in November and preemptively announced without the Army’s permission is much smaller and less favorable than management as intimated,” and that “[i]t’s highly implausible that a mass-production facility for manufacturing drones has been built at any point in the last two years for less than $1 million.” On this news, the price of Red Cat stock fell more than 21% over two trading sessions, according to the complaint.
ABOUT ROBBINS GELLER: Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities fraud and shareholder litigation. Our Firm has been ranked #1 in the ISS Securities Class Action Services rankings for four out of the last five years for securing the most monetary relief for investors. In 2024, we recovered over $2.5 billion for investors in securities-related class action cases – more than the next five law firms combined, according to ISS. With 200 lawyers in 10 offices, Robbins Geller is one of the largest plaintiffs’ firms in the world, and the Firm’s attorneys have obtained many of the largest securities class action recoveries in history, including the largest ever – $7.2 billion – in In re Enron Corp. Sec. Litig.