Red Cat Holdings, Inc.

Registration Deadline:

07/22/2025

A securities class action has been filed in the USDC N.J. against Red Cat Holdings, Inc. (RCAT) (“Red Cat” or the “Company”) on behalf of all persons and entities that purchased or otherwise acquired Red Cat securities between March 18, 2022, and January 15, 2025, both dates inclusive (the “Class Period”).

 

Red Cat, together with its subsidiaries, provides 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, Defendants 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.

 

The complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that:

(1) the Salt Lake City Facility’s production capacity, and Defendants’ progress in developing the same, was overstated;

(2) the overall value of the SRR Contract was overstated; and

(3) as a result, Defendants’ public statements were materially false and misleading at all relevant times, thereby harming investors.

 

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, Defendants 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 filed an annual report on Form 10-K with the U.S. Securities and Exchange Commission 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.

 Following these disclosures, Red Cat’s stock price fell $0.10 per share, or 8.93%, to close at $1.02 per share on July 28, 2023.

Then, on January 16, 2025, Kerrisdale Capital (“Kerrisdale”) published a report (the “Kerrisdale Report”) alleging, inter alia, that Defendants had overstated the value of the SRR Contract, which Kerrisdale found was only worth approximately $20 million to $25 million based on 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, Red Cat’s stock price fell $2.35 per share, or 21.54%, over the following two trading sessions, to close at $8.56 per share on January 17, 2025.

 

If you purchased Red Cat securities during the class period and would like to receive more information or join the action, please enter your contact information below for a FREE consultation and click “Submit Your Information”.

 

About Lowey Dannenberg

Lowey Dannenberg is a national firm representing institutional and individual investors, who suffered financial losses resulting from corporate fraud and malfeasance in violation of federal securities and antitrust laws. The firm has significant experience in prosecuting multi-million-dollar lawsuits and has previously recovered billions of dollars on behalf of investors.

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