March 8 – Rivian Automotive Inc (RIVN.O) is suing a shareholder who alleged the startup failed to tell investors it was underpricing its electric vehicles, leading to unpopular price hikes, which it quickly canceled.
In a complaint filed Monday in U.S. District Court in San Francisco, shareholder Charles Larry Crews said Rivian hid that its R1S SUV and R1T pickup truck were so underpriced that it had to raise prices shortly after its November initial public offering.
Crews said the increase would “tarnish Rivian’s reputation as a trustworthy and transparent company” and risk canceling a large number of pre-orders out of 55,400 made back in 2018.
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He called the rollback, including CEO R. J. Scaringe’s apology, “a vain attempt to make amends.”
Rivian did not immediately respond to requests for comment Tuesday.
The proposed class-action lawsuit comes after Rivian of Irvine, Calif., caused backlash from customers on March 1, including on social media, by raising the price of the R1S to $84,500 from $70,000 and the price of the R1T to around $79,500. from $67,500.
Rivian backed out two days later, saying that customers with existing pre-orders would not face higher prices, and customers who canceled orders could reinstate them. More
“This was wrong and we have damaged your trust in Rivian,” Scaringe wrote to clients in a March 3 letter. Rivian cited inflationary pressures for rising prices.
The Amazon.com-backed company went public at $78 a share on Nov. 10, raising about $12 billion in the world’s largest 2021 IPO. read more
Its shares closed at $42.43 on Monday after losing 37% of their value in the previous five trading days.
Crews said he bought 35 Rivian shares on the first day of trading for $112.83 each, up 45% from the IPO price.
In an email, his lawyer Jacob Walker said federal securities laws provide investors with “a very strong remedy” when companies omit key facts in IPO filings.
More than 30 defendants appear in the lawsuit, including Scaringe and lead underwriters for IPOs of Goldman Sachs (GS.N), JPMorgan Chase (JPM.N) and Morgan Stanley (MS.N).
Crews v Rivian Automotive Inc et al, U.S. District Court, Northern District of California, no. 22-01433.
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Reporting by Jonathan Stempel in New York; Editing by Bernadette Baum and Leslie Adler
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