Freshpet, Inc. (FRPT) Accused of Touting Promising Outlook Despite Production Problems

According to the complaint against the company's officers and directors for breaches of their fiduciary duties from March 2015 through November 2015, although Freshpet's officials knew that the company was experiencing production issues that prevented it from keeping Freshpet fridges stocked at many locations, Freshpet officials projected an optimistic outlook for the company. While Freshpet's stock was artificially inflated, company insiders sold over 7 million shares of their personally-held Freshpet stock for gross proceeds of over $140.8 million. On November 11, 2015, Freshpet finally lowered its guidance and admitted to approximately $2.4 million in lost sales, noting that the recent bankruptcy of two grocery retailers impacted Freshpet's fridge count and sales by approximately 100 locations. On this news, Freshpet's stock fell over 25%, representing a loss of over $70 million in market capitalization.

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