REV Group, Inc. (REVG) Accused of Overestimating Margin Growth Potential

According to the complaint against the company's officers and directors for alleged breaches of fiduciary duties pursuant to the company's January 27, 2017, initial public offering, REV Group, Inc. (REVG) represented that investors should expect continued margin growth, citing the company's efficient manufacturing facilities. Even though REV's facilities were not operating as effectively as the company represented, REV officials continued to make optimistic predictions about the company's business prospects. The truth began to emerge on March 7, 2018, when REV revealed that its margins and growth rates had declined, causing the company's stock price to fall 12% the following day. Then, on June 6, 2018, REV substantially cut its fiscal year earnings guidance while admitting that the company experienced lower-than-expected sales of certain product categories. Since REV began reporting dismal financial results, the company's stock has plummeted over 70% and currently trades at just over $8 per share.

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