The Red Cat class action lawsuit alleges that Red Cat misled investors from March 18, 2022, to January 15, 2025. The company’s Salt Lake City facility could only produce 100 drones monthly, yet they claimed a capacity of 1,000. They also misrepresented the value of their U.S. Army’s Short Range Reconnaissance Program contract. Investors have until July 22, 2025, to step forward as lead plaintiff in this case that claims violations of the Securities Exchange Act of 1934.

Red Cat’s securities buyers have faced heavy financial losses during this period. The company’s stock initially dropped 9% in July 2023 after they revealed production limits. More drops followed as new information contradicted their earlier public statements. Affected investors should review their legal options before the deadline approaches.

If you suffered substantial losses and wish to serve as lead plaintiff of the Red Cat class action lawsuit, or just have general questions about you rights as a shareholder, please contact attorney Timothy L. Miles of the Law Offices of Timothy L. Miles, at no cost, by calling 855/846-6529 or via e-mail at [email protected].

Red Cat faces class action over misleading investor statements

Law firms have filed a class action lawsuit against Red Cat Holdings, Inc. for securities fraud. The drone technology company faces allegations about making false and misleading statements about two key parts of its business.

Salt Lake City facility capacity allegedly overstated

Red Cat’s claims about its manufacturing capabilities form the first major allegation. The company told investors throughout 2022 that its Salt Lake City facility could produce “thousands of drones per month” or “tens of thousands of drones per year”.

The company doubled down in March 2023 by stating “The Salt Lake City factory is complete and ready to go” with “capacity to produce thousands of drones per month”.

The truth came out on July 27, 2023. Red Cat’s earnings call and annual Form 10-K filing revealed the facility could only make 100 drones per month. This was nowhere near what they had claimed before. The company also admitted they were still building and refining the facility, which was only “substantially completed”.

Red Cat acknowledged that reaching even 1,000 drones monthly would need:

• More money for “additional capital investments”
• A timeline of “2 to 3 years”
• Success in “manufacturing efficiencies realized”

The market reacted quickly. Red Cat’s stock dropped 8.9% to $1.02 per share on July 28, 2023.

SRR contract value misrepresented in public disclosures

The second big issue deals with how Red Cat described its U.S. Army Short Range Reconnaissance (SRR) Program contract. The company told investors this deal could be worth “hundreds of millions to over a billion dollars“.

Red Cat painted a rosy picture, calling the contract a “USD 200.00–USD 400.00 million revenue generator”. During a November 19, 2024 conference call about winning the contract, executives said Red Cat could make “up to USD 50.00 million to USD 79.50 million in revenue” from the SRR Contract in fiscal year 2025 alone.

This story fell apart on January 16, 2025. Kerrisdale Capital published a report showing the real contract value was likely just “USD 20.00–USD 25.00 million” based on U.S. Army budget documents.

The report claimed Red Cat had “announced the win without Army permission,” which could hurt future deals.

The news hit hard. Red Cat’s stock fell 21.5% over two trading days, ending at $8.56 per share. This marked the third big stock drop tied to alleged false statements, after the July 2023 facility news and September 2024 production pause announcement.

The lawsuit, Olsen v. Red Cat Holdings, Inc. (No. 25-cv-05427, D.N.J.), aims to represent everyone who bought Red Cat securities between March 18, 2022, and January 15, 2025. The plaintiffs say these false statements broke Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.

Stock drops follow key disclosures and reports

Red Cat’s stock price dropped three times after the company revealed gaps between what they said and what actually happened. These drops show how much money investors lost when they bought securities during this time.

July 2023: Production capacity update triggers 9% drop

Red Cat shared its fiscal year 2023 financial results on July 27, 2023. The news shocked investors. The company had claimed its Salt Lake City facility could make “thousands of drones per month.” The truth was they could only make 100 drones monthly.

On top of that, Red Cat said the facility was only “mostly finished” instead of ready to go. The company said it would take:

• More money
• 2-3 years
• Better manufacturing processes to reach 1,000 drones monthly

The stock fell $0.10 per share (8.93%) and ended at $1.02 on July 28, 2023. This was the first big drop tied to what they said about making drones.

September 2024: Missed earnings and halted production cause 25% decline

Later, on September 23, 2024, Red Cat shared bad news about Q1 fiscal year 2025. The numbers showed:

• A loss of $0.17 per share, which was $0.09 worse than expected
• Revenue of $2.80 million, missing estimates by $1.07 million
• They stopped making drones at the Salt Lake City facility

The company said they “spent the last four months…retooling [the facility] and preparing for high volume production”. They also admitted they “couldn’t produce and sell Teal 2 units while retooling”. This went against what they had said before about being ready to make drones.

The stock dropped 25.32% in two days and closed at $2.36 per share on September 25, 2024. This was the second big drop linked to what they told investors.

January 2025: Kerrisdale report leads to 21% stock plunge

Red Cat announced winning the SRR Contract on November 19, 2024. They expected to make $50.00 to $79.50 million in fiscal year 2025.

But on January 16, 2025, Kerrisdale Capital released a report that changed everything. The report:

• Said the SRR Contract was worth just $20.00-25.00 million, not the “hundreds of millions to over a billion dollars” Red Cat had suggested
• Showed CEO Jeffrey Thompson and other executives sold 1.6 million shares worth over $16.00 million after the SRR news
• Revealed Teal’s founder George Matus quit just one week after the SRR announcement and sold 800,000 shares at $11.75
• Mentioned CFO Leah Lunger also quit and sold 500,000 shares

The stock fell 21.54% over two days and closed at $8.56 per share on January 17, 2025. This third drop showed a clear pattern: every time Red Cat revealed the truth, their stock went down.

Red Cat’s shareholders lost a lot of money. Their investment dropped more than 50% during these key moments. These big losses are why investors started a class action lawsuit to get their money back from what they say was securities fraud.

Investors urged to act before July 22, 2025 deadline

The Red Cat class action lawsuit legal proceedings have started, and investors must act quickly. Shareholders have until July 22, 2025 to become lead plaintiff. This gives you about a month to assess your options and act.

Who qualifies for the class period

The lawsuit covers anyone who bought or acquired Red Cat Holdings securities between March 18, 2022 and January 15, 2025. This “Class Period” captures all relevant disclosures and alleged misrepresentations that are the foundations of the legal claims.

The United States District Court for the District of New Jersey handles this case under number 25-cv-05427.

The legal team wants to recover damages from alleged violations of federal securities laws, specifically Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. Court documents show defendants allegedly made false claims about Salt Lake City facility’s production capacity and inflated the SRR Program contract value.

How to register for the Red Cat lawsuit

You can easily join the Red Cat lawsuit by reaching out to Attorney Timothy L. Miles from the Law Offices of Timothy L. Miles can help if you had significant losses and want to be lead plaintiff. You can call him at 855/846-6529 or email [email protected] at no cost.

No cost or obligation to participate

The Red Cat class action lawsuit comes with zero financial risk. Lawyers work on contingency fees. You won’t pay any fees or expenses. Once you register, you’ll get access to portfolio monitoring software that tracks your case’s progress.

You can still get your share of any future recovery without being lead plaintiff. You keep your eligibility for recovery even if you take no action as an absent class member.

Lead plaintiff process explained under federal law

The Private Securities Litigation Reform Act (PSLRA) of 1995 created rules for securities class actions. These rules focus on choosing lead plaintiffs who represent shareholder interests. This knowledge helps investors who want to join the Red Cat class action lawsuit.

What is a lead plaintiff and their role

Lead plaintiffs represent all class members in securities fraud class actions. Federal law gives them key responsibilities. They pick and hire lead counsel, negotiate lawyer fees, watch over the lawsuit, take part in settlement talks, and make big case decisions.

The lead plaintiff must put everyone’s interests ahead of their own as a fiduciary for all affected investors.

How the lead plaintiff is selected

The PSLRA sets clear steps to pick a lead plaintiff. The original plaintiff must tell potential class members about the case within 20 days of filing. Class members then get 60 days to ask the court to name them lead plaintiff. The court picks the “most adequate plaintiff” – usually the investor who lost the most money and meets other requirements.

Congress wanted big institutions to be lead plaintiffs when they made the PSLRA. Regular investors who lost a lot can do a good job too. Research shows cases with institutional lead plaintiffs often end up with bigger settlements.

What it means for other investors’ recovery

The lead plaintiff’s choices shape what everyone gets back. They negotiate settlements and lawyer fees that affect final amounts. The law limits their share to match their percentage of losses in any final award.

If you lost money and want to be the lead plaintiff in the Red Cat class action lawsuit, or have questions about your shareholder rights, call attorney Timothy L. Miles at the Law Offices of Timothy L. Miles. It’s free – dial 855/846-6529 or email [email protected].

Conclusion: Understanding your options in the Red Cat Lawsuit as an affected investor

The Red Cat class action lawsuit is a major legal challenge about alleged misrepresentations of production capacity and contract value. This piece covered how these claims triggered three big stock drops—9% in July 2023, 25% in September 2024, and 21% in January 2025. These dramatic falls hit many investors who bought securities during the class period hard.

Affected shareholders don’t have much time left. The July 22, 2025 deadline in the Red Cat class action lawsuit is coming up fast, and investors need to decide on their options quickly. Your interests need protection, so knowing the legal process is vital whether you want to be lead plaintiff or stay an absent class member.

The PSLRA lead plaintiff selection process gives investors with big losses a chance to shape the litigation strategy. Individual shareholders with significant financial stakes can be effective representatives, though institutional investors often take this role.

Dealing with securities fraud claims can feel daunting. This lawsuit might help shareholders get back losses from the specified period. Whatever you choose—active participation or just watching from the sidelines—knowing your legal rights matters as this case moves through the courts.

Frequently Asked Questions About the Red Cat Lawsuit

Q1. What is the Red Cat class action lawsuit about? The lawsuit alleges that Red Cat Holdings made misleading statements about its Salt Lake City facility’s production capacity and misrepresented the value of a U.S. Army contract, leading to significant stock price drops and investor losses.

Q2. Who is eligible to participate in the Red Cat lawsuit? Investors who purchased Red Cat Holdings securities between March 18, 2022, and January 15, 2025, are eligible to participate in the class action lawsuit.

Q3. What is the deadline for joining the Red Cat lawsuit? The deadline to seek appointment as lead plaintiff in the Red Cat class action lawsuit is July 22, 2025.

Q4. How can investors join the Red Cat lawsuit? If you purchased during the class period and suffered a loss you are automatically a member of the class and do not need to do anything at this point unless moving for lead plaintiff.

Q5. Is there a cost to participate in the Red Cat lawsuit? No, there is no upfront cost to participate. The law firms representing investors are working on a contingency fee basis, meaning they only get paid if they secure a recovery for the class.

Q6. What was the actual production capacity of Red Cat’s Salt Lake City facility? According to the lawsuit, the Salt Lake City facility could only produce 100 drones per month, despite the company’s claims of being able to manufacture “thousands of drones per month” or “tens of thousands of drones per year.”

Q7. How did Red Cat’s stock price react to the company’s disclosures? Red Cat’s stock experienced multiple significant drops, including a 9% fall in July 2023, a 25% decline in September 2024, and a 21.54% drop in January 2025, following various disclosures and reports about the company’s operations and contracts.