The Law Offices of Frank R. Cruz Reminds Investors of Looming Deadline in the Class Action Lawsuit Against Root, Inc. (ROOT)
The Law Offices of Frank R. Cruz reminds investors of the upcoming May 18, 2021 deadline to file a lead plaintiff motion in the class action filed on behalf of investors who purchased or otherwise acquired Root, Inc. (“Root” or the “Company”) (NASDAQ: ROOT): (a) securities between October 28, 2020 and March 8, 2021, inclusive (the “Class Period”); and/or (b) Root Class A common stock pursuant and/or traceable to the Offering Documents issued in connection with the Company’s initial public offering on or about October 28, 2020 (the “IPO” or “Offering”).
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On or around October 28, 2020, Root conducted its IPO, selling 26.8 million shares of common stock priced at $27.00 per share.
On December 1, 2020, post-market, Root announced its third quarter 2020 financial results, reporting revenues of $50.5 million (or down 36.6% year-over-year) and earnings per share (“EPS”) of -$2.20 per share (missing consensus estimates by $1.79 per share).
On this news, the Company’s stock fell $2.30, or over 13%, to close at $14.70 per share on December 2, 2020.
Then, on February 25, 2021, post-market, Root announced its fourth quarter and full year 2020 financial results, reporting EPS of -$0.72, missing consensus estimates by $0.07 per share.
On this news, the Company’s stock fell $2.93, or nearly 18%, to close at $13.49 per share on February 26, 2021.
Then, on March 9, 2021, BofA Securities analyst Joshua Shanker initiated coverage of Root with an “Underperform” rating on the premise that the Company is unlikely to be cash flow positive until 2027, finding that Root “will require not insignificant cash infusions from the capital markets to bridge its cash flow needs.” The report stated that already established market players would continue to impede the Company’s profitability with superior telematics data and their dominant market positions.
On this news, stock price fell $0.18 per share, or 1.46%, to close at $12.17 per share on March 9, 2021, representing a 55% decline from the IPO price.
The complaint filed alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, the Offering Documents and Defendants failed to disclose to investors that: (1) Root would foreseeably fail to generate positive cash flow for at least several years following the IPO; (2) accordingly, the Company would foreseeably require significant cash infusions to meet its cash flow needs; (3) notwithstanding the Defendants’ touting of Root’s purportedly unique, data-driven advantages, several of the Company’s established industry peers in fact possessed significant competitive advantages over Root with respect to, inter alia, telematics data and data engagement; and (4) as a result, the Offering Documents and Defendants’ public statements throughout the Class Period were materially false and/or misleading and failed to state information required to be stated therein.
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If you purchased or otherwise acquired Root securities during the Class Period, you may move the Court no later than May 18, 2021 to request appointment as lead plaintiff in this putative class action lawsuit. To be a member of the class action you need not take any action at this time; you may retain counsel of your choice or take no action and remain an absent member of the class action. If you wish to learn more about this class action, or if you have any questions concerning this announcement or your rights or interests with respect to the pending class action lawsuit, please contact Frank R. Cruz, of The Law Offices of Frank R. Cruz, 1999 Avenue of the Stars, Suite 1100, Los Angeles, California 90067 at 310-914-5007, by email to firstname.lastname@example.org, or visit our website at www.frankcruzlaw.com. If you inquire by email please include your mailing address, telephone number, and number of shares purchased.
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