A Rivian Automotive Inc shareholder is suing the company claiming it misled investors in its initial public offering by mispricing its electric vehicles, leading to the unpopular price hikes (and subsequent rollbacks) that have lowered its share price.
The complaint was filed by Charles Larry Crews on Monday in the U.S. District Court in San Francisco. It claimed that Rivian concealed how the R1T pickup and R1S SUV were underpriced in its 2021 IPO, reports Reuters.
Crews said that the eventual price increases “would tarnish Rivian’s reputation as a trustworthy and transparent company” and put a number of preorders dating back to 2018 in jeopardy of cancelation. He called the later price rollback and apology from Rivian CEO R.J. Scaringe a “futile attempt at damage control.”
Read Also: Rivan Backtracks On Price Hike In Face Of Customer Outrage, But New Buyers will Still Pay More
Early this month, Rivian announced that it would increase the prices of its two consumer vehicles by about 20 percent, citing inflationary pressures and higher components costs. That meant that the base price of the R1T went from $67,500 to $79,500 and the base price of the R1S rose from $70,000 to $84,500.
On March 3, Scaringe apologized for the price hike calling it wrong and acknowledged that the increases “broke the trust” it had worked to build with customers. He then added that all customers with an order made before March 1 would be able to buy their Rivian at the original price, even if they had canceled their orders in the wake of the price hike.
Despite the apology and the reinstating of prices for order-holders, Rivian’s share price has suffered. The company went public in November 2021 at a price of $78.00 per share before rising above $100 per share. That IPO raised about $12 billion for the company and was the largest in 2021. On Monday, its shares closed at $42.43 after having lost 37 percent of their value in the preceding five days of trading.
