On August 12, 2016, Pomerantz LLP was appointed Lead Counsel in a class action lawsuit against Sunrun Inc. The class action, filed in United States District Court, Northern District of California, and docketed under 16-cv-02480, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired Sunrun securities pursuant or traceable to the Company's Registration Statement and its Prospectus issued in connection with the Company's Initial Public Offering (the "Offering" or "IPO"), which commenced on or about August 5, 2015. This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws under the Securities Exchange Act of 1934 (the "Exchange Act") and the Securities Act of 1933 (the "1933 Act"). Click here to join this action.
Sunrun is a provider of residential solar electricity and purports to operate the "second largest fleet of residential solar energy systems" in the United States.
On or about March 27, 2015, Sunrun filed with the SEC its registration statement on Form S-l (Registration No. 333- 205217), which was amended and later declared effective by the SEC (the "Registration Statement"). Meanwhile, lawmakers in the Nevada Legislature rejected a call by rooftop solar companies, including Sunrun, to increase the cap on the number of consumers who can participate in net metering solar programs from 3% to a higher level. On August 5, 2015, Sunrun sold 17.9 million shares at $14.00 per share as part of its IPO.
The complaint alleges that throughout the Class Period, Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about Sunrun's business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (a) Sunrun's actual historical operating costs were being understated by not identifying and disclosing the fixed grid costs being borne for it by public utilities where net metering programs were being employed; (b) Sunrun had been charging well above wholesale rates for the electricity it was selling to its net metering customers; (c) contrary to having listed customers dispersed across 15 states and the District of Columbia in its Registration Statement, Sunrun had a substantial 20% customer concentration in Nevada alone; (d) Sunrun's ability to continue to convince customers to sign 20-year contracts—which lowers the fixed costs for installing solar systems on those customers' houses—was in jeopardy due to the ongoing regulatory review of net metering programs in 20 of the 40 states that then permitted net metering; (e) because Sunrun was employing an unreasonably low discount rate of 6% in calculating the value of it retained assets, it was overstating their value; and (f) as a result of the foregoing, at the time of the IPO, the Company's business and financial prospects were not what defendants had led the market to believe they were in the Registration Statement.
In the eight months since the IPO, as the market learned that Sunrun relied on complex debt arrangements to fund its growth and could not sustain the revenues the Company forecast leading up to the IPO, Sunrun stock fell as low as $4.86 per share, and closed at $7.50 per share on May 6, 2016.