Rivian Automotive Inc (NASDAQ: RIVN) is required to face a lawsuit alleging it deceived shareholders during and post its 2021 initial public offering.
Rivian, backed by Amazon.com (NASDAQ: AMZN), launched its IPO at $78.00 per share on November 10, 2021, raising about $12 billion in 2021's largest IPO.
The claim is that Rivian concealed it had underpriced its electric vehicles, subsequently leading to unpopular price increases.
Earlier this week, Rivian said it produced 13,992 vehicles in the second quarter, up from 9,395 in the first quarter. The company reported second-quarter deliveries of 12,640 vehicles, up from 7,946 in the first quarter. Rivian's production and delivery numbers were in line with company expectations.
U.S. District Judge Josephine Staton has ruled that shareholders can attempt to demonstrate that Rivian knew it would need to raise prices for its R1S SUV and R1T pickup truck due to increased material costs to prevent even greater losses.
Following Rivian's price hike announcement on March 1, 2022, the company's share price plummeted 39% over ten days, Reuters reported. The R1S price rose from $70,000 to $84,500 and the R1T from $67,500 to $79,500, sparking customer outrage.
Two days later, Rivian reversed the decision, assuring customers who pre-ordered before March 1 wouldn't be subjected to the increased prices. Rivian's CEO RJ Scaringe apologized for the situation.
In her July 3 decision, Judge Staton described the alleged higher costs as a "major obstacle to profitability unique to Rivian" rather than a typical problem.
Judge Staton also denied a request to dismiss claims against the IPO's lead underwriters Goldman Sachs, JPMorgan Chase, and Morgan Stanley.
The lawsuit involves shareholders from the IPO date until March 10, 2022.
Price Action: RIVN shares are up 2.52% at $20.95 on the last check Thursday.