RADNOR, Pa., April 4, 2021 (GLOBE NEWSWIRE) – Law firm Kessler Topaz Meltzer & Check, LLP announces that a class action lawsuit has been filed against securities fraud in the U.S. District Court for the Southern District of Ohio Root, Inc. (NASDAQ: ROOT) (“Root”) on behalf of those who bought or acquired: (a) Root Securities between October 28, 2020 and March 8, 2021, both dates inclusive (the “Class Period”); and / or (b) Class A Common Shares issued in connection with Root’s initial public offering on or about October 28, 2020 (the “Initial Public Offering”).
Shareholder Deadline Reminder: Investors who have bought or acquired Root Securities during the lesson period, no later than May 18, 2021try to be appointed as the plaintiff’s principal representative of the class. For more information or to learn how to participate in this litigation, please contact Kessler Topaz Meltzer & Check, LLP: James Maro, Esq. (484) 270-1453 or Adrienne Bell, Esq. (484) 270-1435; toll free at (844) 887-9500; per email to firstname.lastname@example.org; or click https://www.ktmc.com/root-inc-class-action-lawsuit?utm_source=PR&utm_medium=link&utm_campaign=root.
Root offers insurance products and services in the United States. Root has historically focused on auto insurance and operates a direct-to-consumer model serving customers primarily through mobile applications as well as through the root website. Before and after going public, Root described himself as an innovator in the personal insurance space with a new data and technology-driven business model that was poised to disrupt traditional insurance markets and gain disproportionate market share, also due to the telematics of Root -driven insurance approach, i.e. the collection and transmission of vehicle usage data via devices.
On October 5, 2020, Root filed a registration statement on a Form S-1 with the Securities and Exchange Commission (“SEC”) in connection with the initial public offering, which, after several changes, was declared effective on October 27, 2020 (the “Registration Statement “). On October 28, 2020, Root went public and sold 26.8 million Class A common shares to the public at a price of $ 27.00 per share for approximate total proceeds of $ 724.43 million. On October 29, 2020, Root filed a prospectus on Form 424B4 with the SEC in connection with the IPO, which included and was part of the registration statement (the “Prospectus” and, along with the registration statement, the “Offer Documents”). ). Throughout the classroom, defendants misrepresented Root’s cash flow needs and business prospects for auto insurance.
The story goes on
The truth about Root’s cash flow needs and auto insurance business outlook was revealed on March 9, 2021 when Bank of America Securities analyst Joshua Shanker (“Shanker”) reported Root’s coverage of Root with an “underperform” – Rating initiated by Root assuming cash flow is unlikely to be positive through 2027 as Root “does not need insignificant cash inflows from the capital markets to meet his cash flow needs”. Shanker also noted that insurers Progressive, Allstate, and Berkshire Hathaways Geico would continue to hurt Root’s profitability, with Progressive and Allstate having a “significant advantage over Root in terms of the amount of [telematics] Data as well as preoccupation with the data “used to evaluate their auto insurance.
Following the news, Root’s share price fell $ 0.18 per share, or 1.46%, to close at $ 12.17 per share on March 9, 2021, a total of 54.93% decrease from the offer price.
The Complaint alleges that the Offer Document and Defendants made false and / or misleading statements and / or failed to disclose that: (i) Root would not be expected to generate positive cash flow for at least several years after the IPO; (ii) accordingly, Root would need significant cash infusions for the foreseeable future to meet his cash flow needs; (iii) Notwithstanding Defendants’ promotion of the allegedly unique, data-driven advantages of Root, several established industry colleagues of Root did in fact enjoy significant competitive advantages over Root, including in relation to telematics data and data binding; and (iv) as a result, Defendants’ offer documents and public statements were materially inaccurate and / or misleading throughout the teaching period and did not contain any information to be included therein.
Root investors can, no later than May 18, 2021, attempt to be appointed as the class lead plaintiff by Kessler Topaz Meltzer & Check, LLP, or other attorney, or choose to do nothing and remain an absent class member. A lead plaintiff is a representative party who acts on behalf of all class members in directing the dispute. To be named lead plaintiff, the court must determine that the class member’s claim is typical of the claims of other class members and that the class member is adequately representing the class. Your ability to get involved in a recovery will not be affected by whether or not you will be the lead plaintiff.
Kessler Topaz Meltzer & Check, LLP, pursues class actions in state and federal courts across the country involving securities fraud, fiduciary violations, and other violations of federal and state law. Kessler Topaz Meltzer & Check, LLP, is a driving force behind corporate governance reform and has reclaimed billions of dollars on behalf of institutional and individual investors from the US and around the world. The company represents investors, consumers and whistleblowers (individuals who report fraudulent practices against the government and are involved in recovering government dollars). The complaint in this lawsuit was not filed by Kessler Topaz Meltzer & Check, LLP. Further information on Kessler Topaz Meltzer & Check, LLP can be found at www.ktmc.com.
Kessler Topaz Meltzer & Check, LLP
James Maro Jr., Esq.
Adrienne Bell, Esq.
280 Street of the King of Prussia
Radnor, PA 19087
(844) 887-9500 (toll free)