SHLS INVESTOR ALERT

Bronstein, Gewirtz & Grossman LLC Announces that Shoals Technologies Group, Inc. Investors with Substantial Losses Have Opportunity to Lead Class Action Lawsuit! - Seite 2

In reality, according to the Complaint, and as remained undisclosed to investors, Shoals learned of customers experiencing wire insulation shrinkback by no later than March 2022. For example, in March 2022, Shoals learned of exposed copper conduit resulting from shrinkback in EBOS wire harnesses at a customer’s solar field in Arizona. Indeed, throughout 2022, Shoals learned of numerous customers experiencing similar copper conduit exposure, or shrinkback. As investors belatedly found out, Shoals had installed defective wire harnesses in at least 300 solar fields. These harnesses represented approximately 30% of the total amount of Shoals harnesses manufactured between 2020 and 2022. As a result, Defendants’ positive statements about the Company’s financial guidance, business, operations, and prospects during the Class Period were materially false and/or misleading.

On November 7, 2023, Shoals stunned the market by revealing that the Company had been forced to take an additional $50.2 million charge for warranty expense as result of the wire shrinkback issue. Shoals further advised that it expected the wire shrinkback issue to cost between $59.7 million and $184.9 million dollars to remedy.

On this news, Shoals’ stock price fell more than 20%, from a closing price of $16.23 per share on November 7, 2023, to a closing price of $12.95 per share on November 9, 2023, wiping out approximately $550 million in market capitalization.

The Complaint alleges that throughout the Class Period the Company made materially false and/or misleading statements and failed to disclose material adverse facts about the Company’s business, operations, and prospects to make the statements made, in light of the circumstances under which they were made, not false and misleading. Specifically, Defendants failed to disclose to investors that:

(1) Shoals did not deliver EBOS products that met the highest levels of quality and reliability;

(2) Shoals had received reports of exposed copper conduit in EBOS wire harnesses in a large number of solar fields and was aware that a significant portion of its wire harnesses had defects;

(3) Shoals would have to incur between $60 million to $185 million in costs to remediate the wire shrinkback issue; and

(4) Shoals had understated its cost of revenue by millions of dollars.

As a result, Shoals’ positive statements about the Company’s financial guidance, business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.