On November 7, 2023, Shoals filed its Quarterly Report on a Form 10-Q for the third quarter of 2023 (“2Q23 10-Q”) and held an accompanying earnings call in which Defendants revealed that a wire insulation issue – referred to as “shrinkback” – was far more severe than previously disclosed. Specifically, the Company reported that shrinkback affected 30% of Shoals’ wire harnesses installed between 2020 and 2022. Consequently, Shoals booked a $50.2 million warranty expense for the second quarter of 2023 related to the shrinkback issue, and provided a related range of potential loss of $59.7 million and $184.9 million.

Following this news, the price of Shoals’ stock dropped $3.28 per share, or more than 20%, to close at $12.95 per share on November 9, 2023.

According to the complaint and throughout the Class Period, the defendants failed to disclose to investors that: (1) Shoals did not deliver EBOS products that met the highest levels of quality and reliability; (2) Shoals had received reports of exposed copper conduit in EBOS wire harnesses in a large number of solar fields and was aware that a significant portion of its wire harnesses had defects; (3) Shoals would have to incur between $60 million to $185 million in costs to remediate the wire shrinkback issue; and (4) Shoals had understated its cost of revenue by millions of dollars.

Investors who purchased or acquired Shoals securities between May 17, 2022 and November 7, 2023, may no later than May 21, 2024, seek to be appointed as a lead plaintiff representative of the class.