Robbins LLP is Investigating Allegations that Red Cat Holdings (RCAT) Misled Investors Regarding its Production Capacity

Robbins LLP informs stockholders that a class action was filed on behalf of investors who purchased or otherwise acquired Red Cat Holdings, Inc. (NASDAQ: RCAT) securities between March 18, 2022 and January 15, 2025. Red Cat, together with its subsidiaries, provides various products, services, and solutions to the U.S. drone industry.

The Allegations

According to the complaint, during the class period, defendants failed to disclose that: (i) the Salt Lake City Facility’s production capacity, and defendants’ progress in developing the same, was overstated; and (ii) the overall value of the SRR (U.S. Army’s Short Range Reconnaissance Program of Record) Contract was overstated.

The complaint alleges that on January 16, 2025, Kerrisdale Capital published a report alleging, inter alia, that defendants had overstated the value of the SRR Contract, which Kerrisdale found was only worth approximately $20 million to $25 million based on U.S. Army budget documents. The Kerrisdale Report also alleged that defendants had been misleading investors about the Salt Lake City Facility’s production capacity for years, while also raising concerns about the timing of executive departures and insider transactions that took place shortly after Red Cat announced it had won the SRR Contract.  On this news, Red Cat’s stock price fell $2.35 per share, or 21.54%, over the following two trading sessions, to close at $8.56 per share on January 17, 2025.

What Now: You may be eligible to participate in the class action against Red Cat Holdings, Inc. Shareholders who want to serve as lead plaintiff for the class have until July 22, 2025, to seek lead plaintiff status with the court. The lead plaintiff is a representative party who acts on behalf of other class members in directing the litigation.  You do not have to participate in the case to be eligible for a recovery. If you choose to take no action, you can remain an absent class member.

All representation is on a contingency fee basis. Shareholders pay no fees or expenses.