A class action lawsuit was filed against Fox Factory Holding Corp. (NASDAQ:FOXF) on February 20, 2024. The plaintiffs (shareholders) alleged that they bought Fox Factory stock at artificially inflated prices between May 6, 2021 and November 2, 2023 (Class Period) and are now seeking compensation for their financial losses. Investors who bought FOXF stock during that period can learn about joining the lawsuit here: https://zlk.com/pslra-1/fox-factory-lawsuit-submission-form?wire=16
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Fox Factory designs and manufactures performance products for specialty sports and on- and off-road vehicles. The company supplies shocks, suspension, and components to leading vehicle and bicycle original equipment manufacturers (OEMs). The company also offers products in the aftermarket segment through its global network of retailers, distributors, and direct-to-consumer channels.
The plaintiffs maintain that Fox Factory and five of its current and/or former senior officers have deceived investors by repeatedly lying and withholding material information about FOXF’s product demand, inventory levels, financial condition, and prospects during the Class Period.
The information became clear on November 2, 2023, when the company’s Q3 FY23 net sales declined 19.1% year-over-year owing to higher inventories at customers. Furthermore, FOXF drastically slashed its Fiscal 2023 sales guidance to the range of $1.45 to $1.47 billion from the previous outlook range of $1.67 billion to $1.70 billion, citing inventory destocking in its Specialty Sports Group (SSG) segment.
Interestingly, during the Class Period, FOXF repeatedly noted that demand and sales in its SSG segment were booming in both the OEM and aftermarket channels. Also, the company said during the Q4 FY22 earnings call in February 2023 that customer demand continued to be positive despite seasonality issues while “the largest challenges are a function of supply chain bloat and the corresponding cash flow challenges within our OEM and aftermarket partners.”
As per the class action lawsuit, Fox Factory had caused the FOXF stock to trade at artificially inflated prices by knowingly and recklessly misleading investors about its business performance and financials.
Notably, since November 2, 2023, FOXF stock has lost 39.8%, and 59% in the past year, causing massive losses to shareholders’ stock holdings.
