SAN DIEGO & COLUMBUS, Ohio--(BUSINESS WIRE)--Shareholder rights law firm Robbins LLP announces it filed a class action lawsuit in the U.S. District Court for the Southern District of Ohio Columbus Division on behalf of purchasers of the Class A common stock of Root (NASDAQ: ROOT) pursuant and/or traceable to the Registration Statement and Prospectus issued in connection with the Company's October 29, 2020 initial public offering ("IPO").
If you purchased shares of Root, Inc. (ROOT) between October 28, 2020 and March 8, 2021, you have until May 18, 2021, to ask the court to appoint you lead plaintiff for the class.
A lead plaintiff is generally the movant with the greatest financial interest in the relief sought by the putative class who is also typical and adequate of the putative class. A lead plaintiff acts on behalf of all other class members in directing the Root class action lawsuit.
If you wish to discuss this action or have any questions concerning your rights or interests, please contact Lauren Levi of Robbins LLP at (800) 350-6003, via the shareholder information form on our website, or by e-mail at email@example.com. Any member of the Class may move the court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.
The class action arises charges Root and certain of its officers and directors, and underwriters of the IPO, with violations of the Securities Exchange Act of 1933. Root described itself as an innovator in the personal insurance space with a new data- and technology-driven business model that was ready to disrupt the traditional insurance markets and capture disproportionate market share through the Company's use of, among other things, telematics.
The complaint alleges that the IPO's offering documents were negligently prepared and, as a result, contained untrue statements of material fact or omitted to state other facts necessary to make the statements made not misleading and were not prepared in accordance with the rules and regulations governing their preparation. Specifically, the complaint alleges that at the time of the IPO: (i) Root had been paying on average at least $600 per customer in acquisition costs, despite the $332 per customer claimed in the offering documents; (ii) Root's increased customer acquisition costs would continue to remain elevated as it sought to aggressively expand its business into more states; and (iii) as a result of the foregoing, Root was not on track to achieve the operational or financial results represented in the Registration Statement and Prospectus used to market the IPO.
Following the IPO, investors learned through a series of disclosures that Root had been paying significantly higher customer acquisition costs at the time of the IPO. A November 2020 report by a stock research analyst with one of the underwriters in the IPO noted that Root could not continue to bear the increased customer acquisition costs and would instead be forced to raise additional capital to survive. Then in February 2021, Root reported much larger losses for fiscal 2020 than the market had been led to expect. On March 9, 2021, another stock research analyst reported that Root would not be cash flow positive until 2027 and would thus "require not insignificant cash infusions from the capital markets to bridge its cash flow needs." The market price of Root Class A common stock has since declined and now trades more than 50% below the $27 per share IPO price.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.
Attorney Advertising. Past results do not guarantee a similar outcome.