By Jonathan Stempel
March 8 (Reuters) – Rivian Automotive Inc (RIVN.O) has been sued by a shareholder who claimed the startup failed to tell investors it had underpriced its electric vehicles, leading to unpopular price hikes that it swiftly rolled back.
In a complaint filed on Monday in U.S. District Court in San Francisco, shareholder Charles Larry Crews said Rivian concealed how its R1S SUV and R1T pickup truck were so underpriced that it needed to raise prices soon after its November initial public offering.
He called the rollback, including an apology from Chief Executive R.J. Scaringe, a “futile attempt at damage control.”
Rivian did not immediately respond on Tuesday to requests for comment.
The proposed class action came after Irvine, California-based Rivian sparked a customer backlash, including on social media, on March 1 by raising the R1S’s price to $84,500 from $70,000, and the R1T’s price to about $79,500 from $67,500.
“It was wrong and we broke your trust in Rivian,” Scaringe wrote customers in a March 3 letter. Rivian cited inflation pressures for the price increases.
The Amazon.com-backed company went public at $78.00 per share on Nov. 10, raising about $12 billion in the world’s largest IPO of 2021. read more
Crews said he bought 35 Rivian shares on its first day of trading at $112.83 each, 45% above the IPO price.
In an email, his lawyer Jacob Walker said federal securities laws provide “a very strong remedy” for investors when companies omit key facts from IPO materials.
The case is Crews v Rivian Automotive Inc et al, U.S. District Court, Northern District of California, No. 22-01433.