Red Cat Holdings, Inc.
Case Overview
39 Days Left to Seek Lead Plaintiff
| Lead Plaintiff Deadline: | Lead Plaintiff Deadline: 07/22/2025 |
| Status: | Status: Investigating |
| Company Name: | Company Name: Red Cat Holdings, Inc. |
| Court: | Court: District of New Jersey |
| Case Number: | Case Number: 2:25cv05427 |
| Class Period: | Class Period: 03/18/2022 - 01/15/2025 |
| Ticker: | Ticker: RCAT |
| Related Attorneys: | Lead Attorneys: Thomas W. Elrod |
| Related Practices: | Related Practices: Securities |
The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed in the U.S. District Court for the District of New Jersey on behalf of those who acquired Red Cat Holdings, Inc. (“Red Cat” or the “Company”) (NASDAQ:RCAT) securities during the period from March 18, 2022, through January 15, 2025 (“the Class Period”). Investors have until July 22, 2025, to apply to the Court to be appointed as lead plaintiff in the lawsuit.
Red Cat, together with its subsidiaries, provide various products, services, and solutions to the U.S. drone industry. The Company’s products include, inter alia, the “Teal 2” drone, a small, unmanned aircraft system (“sUAS”) designed to purportedly “Dominate the Night” during nighttime military operations.
Red Cat manufactures its drones through its subsidiary Teal Drones, Inc. (“Teal”) at a facility located in Salt Lake City, Utah (the “Salt Lake City Facility”). Throughout 2022, Red Cat touted their development of the Salt Lake City Facility’s capacity to produce “thousands of drones per month” or “tens of thousands of drones” per year.
In March 2022, Red Cat announced that Teal had been selected by the U.S. Department of Defense (“DoD”)’s Defense Innovation Unit and the U.S. Army to compete in Tranche 2 of the U.S. Army’s Short Range Reconnaissance Program of Record (the “SRR Program”). The SRR Program is a U.S. Army initiative to provide a small, rucksack-portable sUAS to U.S. Army platoons. At all relevant times, Red Cat suggested or otherwise asserted that the SRR Program’s Tranche 2 contract (the “SRR Contract”) was worth potentially hundreds of millions to over a billion dollars in contract revenue.
In March 2023, Red Cat management confirmed that “[t]he Salt Lake City Factory is complete and ready to go” and “[w]e now have the capacity to produce thousands of drones per month.”
On July 27, 2023, Red Cat hosted a conference call with investors and analysts to discuss its financial and operating results for its fiscal year 2023. During the call, Red Cat revealed that the Salt Lake City Facility could only currently produce 100 drones per month, and that the facility was still being built, refined, and expanded. Red Cat files an annual report on Form 10-K with the SEC the same day, which likewise reported that construction of the facility was only “substantially completed” and potentially could reach a production capacity of one thousand drones per month over the next 2 to 3 years, but only with additional capital investments and manufacturing efficiencies realized. On this news, the price of Red Cat shares declined by $0.10 per share, from $1.12 per share on July 27, 2023, to close at $1.02 on July 28, 2023.
Then, on September 23, 2024, Red Cat issued a press release announcing its financial and operating results for the first quarter of its fiscal year 2025. Among other results, the Company reported losses per share of $0.17, missing consensus estimates by $0.09, and revenue of $2.8 million, missing consensus estimates by $1.07 million. On a subsequent conference call that Red Cat hosted with investors and analysts the same day to discuss these results, Company management disclosed that Red Cat had spent “the past four months … retooling [the Salt Lake City Facility] and preparing for high volume production[,]” while admitting that a “pause in manufacturing of Teal 2 and building our Army prototypes impacted Teal 2 sales” because, inter alia, Red Cat “could produce and sell Teal 2 Units[] while retooling [its] factory.” On this news, the price of Red Cat shares declined by $0.57 per share, or approximately 18%, from $3.16 per share on September 23, 2024, to close at $2.59 on September 24, 2024.
Later, on November 19, 2024, Red Cat issued a press release announcing that it had won the SRR Contract, On a subsequent conference call that Red Cat hosted with its investors and analysts the same day to discuss the contract win, Red Cat continued to assert that the SRR Contract was worth potentially hundreds of millions of dollars, while expressing their confidence that Red Cat could realize up to $50 million to $79.5 million in revenue from the SRR Contract during fiscal year 2025 alone.
Finally, on January 16, 2025, Kerrisdale Capital (“Kerrisdale”) published a report (the “Kerrisdale Report”) alleging, inter alia, that Red Cat had overstated the value of the SRR Contract, while Kerrisdale found was only worth approximately $20 million to $25 million based on the U.S. Army budget documents. The Kerrisdale Report also alleged that Defendants had been misleading investors about the Salt Lake City Facility’s production capacity for years, while also raising concerns about the timing of executive departures and insider transactions that took place shortly after Red Cat announced it had won the SRR contract. On this news, the price of Red Cat shares declined by $1.54 per share, or approximately 15%, from $10.10 per share on January 16, 2025, to close at $8.56 on January 17, 2025.
The complaint alleges that defendants, throughout the Class Period, failed to disclose that: (1) the Salt Lake City Facility’s production capacity, and Defendants’ progress in developing the same, was overstated; and (2) the overall value of the SRR Contract was overstated.
Red Cat, together with its subsidiaries, provide various products, services, and solutions to the U.S. drone industry. The Company’s products include, inter alia, the “Teal 2” drone, a small, unmanned aircraft system (“sUAS”) designed to purportedly “Dominate the Night” during nighttime military operations.
Red Cat manufactures its drones through its subsidiary Teal Drones, Inc. (“Teal”) at a facility located in Salt Lake City, Utah (the “Salt Lake City Facility”). Throughout 2022, Red Cat touted their development of the Salt Lake City Facility’s capacity to produce “thousands of drones per month” or “tens of thousands of drones” per year.
In March 2022, Red Cat announced that Teal had been selected by the U.S. Department of Defense (“DoD”)’s Defense Innovation Unit and the U.S. Army to compete in Tranche 2 of the U.S. Army’s Short Range Reconnaissance Program of Record (the “SRR Program”). The SRR Program is a U.S. Army initiative to provide a small, rucksack-portable sUAS to U.S. Army platoons. At all relevant times, Red Cat suggested or otherwise asserted that the SRR Program’s Tranche 2 contract (the “SRR Contract”) was worth potentially hundreds of millions to over a billion dollars in contract revenue.
In March 2023, Red Cat management confirmed that “[t]he Salt Lake City Factory is complete and ready to go” and “[w]e now have the capacity to produce thousands of drones per month.”
On July 27, 2023, Red Cat hosted a conference call with investors and analysts to discuss its financial and operating results for its fiscal year 2023. During the call, Red Cat revealed that the Salt Lake City Facility could only currently produce 100 drones per month, and that the facility was still being built, refined, and expanded. Red Cat files an annual report on Form 10-K with the SEC the same day, which likewise reported that construction of the facility was only “substantially completed” and potentially could reach a production capacity of one thousand drones per month over the next 2 to 3 years, but only with additional capital investments and manufacturing efficiencies realized. On this news, the price of Red Cat shares declined by $0.10 per share, from $1.12 per share on July 27, 2023, to close at $1.02 on July 28, 2023.
Then, on September 23, 2024, Red Cat issued a press release announcing its financial and operating results for the first quarter of its fiscal year 2025. Among other results, the Company reported losses per share of $0.17, missing consensus estimates by $0.09, and revenue of $2.8 million, missing consensus estimates by $1.07 million. On a subsequent conference call that Red Cat hosted with investors and analysts the same day to discuss these results, Company management disclosed that Red Cat had spent “the past four months … retooling [the Salt Lake City Facility] and preparing for high volume production[,]” while admitting that a “pause in manufacturing of Teal 2 and building our Army prototypes impacted Teal 2 sales” because, inter alia, Red Cat “could produce and sell Teal 2 Units[] while retooling [its] factory.” On this news, the price of Red Cat shares declined by $0.57 per share, or approximately 18%, from $3.16 per share on September 23, 2024, to close at $2.59 on September 24, 2024.
Later, on November 19, 2024, Red Cat issued a press release announcing that it had won the SRR Contract, On a subsequent conference call that Red Cat hosted with its investors and analysts the same day to discuss the contract win, Red Cat continued to assert that the SRR Contract was worth potentially hundreds of millions of dollars, while expressing their confidence that Red Cat could realize up to $50 million to $79.5 million in revenue from the SRR Contract during fiscal year 2025 alone.
Finally, on January 16, 2025, Kerrisdale Capital (“Kerrisdale”) published a report (the “Kerrisdale Report”) alleging, inter alia, that Red Cat had overstated the value of the SRR Contract, while Kerrisdale found was only worth approximately $20 million to $25 million based on the U.S. Army budget documents. The Kerrisdale Report also alleged that Defendants had been misleading investors about the Salt Lake City Facility’s production capacity for years, while also raising concerns about the timing of executive departures and insider transactions that took place shortly after Red Cat announced it had won the SRR contract. On this news, the price of Red Cat shares declined by $1.54 per share, or approximately 15%, from $10.10 per share on January 16, 2025, to close at $8.56 on January 17, 2025.
The complaint alleges that defendants, throughout the Class Period, failed to disclose that: (1) the Salt Lake City Facility’s production capacity, and Defendants’ progress in developing the same, was overstated; and (2) the overall value of the SRR Contract was overstated.