MGP Ingredients, Inc. Investors: February 14, 2025 Filing Deadline in Securities Class Action - Contact Lieff Cabraser

Rhea-AI Summary

MGP Ingredients (MGPI) faces a securities class action lawsuit regarding alleged false statements about its liquor business between May 4, 2023, and October 30, 2024. The lawsuit claims MGPI executives misled investors about inventory issues and product demand. The truth emerged in stages: On February 22, 2024, MGPI issued below-consensus guidance, causing a 15% stock drop. On October 17, 2024, the company admitted to soft demand and high inventories, leading to a 30% stock decline. Finally, on October 31, 2024, MGPI announced production scaling down and inventory challenges, resulting in another 15% stock price drop to $48.04.

Positive

• None.

Negative

• Facing securities class action lawsuit for alleged misleading statements
• Below-consensus revenue guidance for 2024
• Forced to scale down whiskey production due to demand issues
• Significant inventory destocking problems at wholesale level
• Stock price declined approximately 60% during disclosure period
• Admitted to soft demand and high inventory levels

Insights

Legal Expert

This securities class action against MGPI presents serious allegations of material misrepresentation regarding inventory levels and product demand. The complaint spans a critical period from May 2023 to October 2024, during which executives allegedly provided false assurances about healthy demand while concealing excess inventory issues. The sequential stock price drops - 15% in February, 30% in October and another 15% at month-end - following revelations about inventory problems and reduced production create a compelling loss causation narrative. The case highlights potential violations of Securities Exchange Act Section 10(b) and Rule 10b-5, focusing on the materiality of statements about core business metrics. With a filing deadline of February 14, 2025, affected investors holding positions during the Class Period face time-sensitive decisions regarding participation. The multiple corrective disclosures and significant stock declines strengthen the plaintiffs' position, suggesting this litigation could result in meaningful settlement discussions.

Financial Analyst

The series of revelations about MGPI's inventory challenges reveals concerning operational and management credibility issues. The stock's cumulative decline from $78.14 to $48.04 represents a devastating 38.5% loss in market value over just eight months. This inventory mismanagement is particularly problematic for a spirits manufacturer, where aging product inventory represents significant tied-up capital and production planning is crucial. The forced production scale-down of whiskey operations signals a severe miscalculation of market demand, potentially impacting several years of future revenue given the aging requirements for premium spirits. The company's market cap erosion from nearly $1.7 billion to $874 million reflects both immediate financial impact and longer-term strategic concerns about management's ability to accurately forecast and manage core business operations.

SAN FRANCISCO, CA / ACCESSWIRE / December 26, 2024 / National plaintiffs law firm Lieff Cabraser Heimann & Bernstein, LLP encourages investors in MGP Ingredients, Inc. ("MGPI" or the "Company") (NASDAQ:MGPI) who purchased or otherwise acquired MGPI common stock between May 4, 2023, and October 30, 2024, inclusive (the "Class Period") to contact us immediately regarding a pending securities class action against MGPI. The deadline to apply to be lead plaintiff is February 14, 2025.

Class Period: May 4, 2023 - October 30, 2024

Lead Plaintiff Motion Deadline: February 14, 2025

Case information: https://www.lieffcabraser.com/securities/mgpi/

Contact us: Email or text investorinfo@lchb.com or call 1-800-541-7358

MGPI, incorporated and headquartered in Atchison, Kansas, manufactures, distills, and sells alcoholic beverages such as tequila, bourbon, rye, and other whiskeys, as well as grain-neutral spirits such as vodka and gin. Demand for liquor, hard liquor in particular, rose in 2020 due to the COVID-19 pandemic.

The action alleges that, throughout the Class Period, MGPI and certain of its senior executives made materially false and misleading statements regarding the Company's business and demand for its liquor products. Specifically, Defendants falsely and repeatedly assured investors that the Company was not facing excess inventory issues and demand for its products remained strong.

On February 22, 2024, the truth began to emerge. The Company issued full-year 2024 revenue guidance that was below industry consensus and noted that "inventory destocking at a wholesale level will remain an issue for the branded spirits industry in 2024." The Company's new CEO and President assured that the Company had worked hard to manage wholesale inventory levels and that demand for its products remained healthy. Following this news, MGPI's common stock price fell by $13.65 per share, or nearly 15%, to close at $78.14 per share on February 22, 2024.

On October 17, 2024, MGPI revealed that soft demand and high inventories were in fact undermining its sales. On this news, MGPI's stock price declined by $24.07, or nearly 30%, over the next three trading days to close at $57.50 on October 22, 2024.

Finally, on October 31, 2024, the Company stated that it would have to "scale down our whiskey production" and that "further inventory tightening is a headwind in the near term." On this news, MGPI's stock price declined by another $8.27, or nearly 15%, to a closing price of $48.04 on October 31, 2024.

About Lieff Cabraser

Lieff Cabraser Heimann & Bernstein, LLP, with over 125 attorneys in offices in San Francisco, New York, Nashville, and Munich, Germany, is an internationally-recognized law firm committed to advancing the rights of investors and promoting corporate responsibility. Repeatedly recognized as a "Plaintiffs' Powerhouse" by Law360, Lieff Cabraser has litigated some of the most important civil cases in the United States, and has assisted clients in recovering over $129 billion in verdicts and settlements. For over 50 years, Lieff Cabraser has remained committed to ensuring access to justice for all.

Source/Contact

Sharon Lee
Lieff Cabraser Heimann & Bernstein, LLP
415 956-1000
slee@lchb.com

SOURCE: Lieff Cabraser Heimann & Bernstein, LLP

View the original press release on accesswire.com

FAQ

What caused MGPI stock to drop 30% in October 2024?

MGPI stock dropped 30% after the company revealed soft demand and high inventory levels on October 17, 2024, causing the stock to decline from $81.57 to $57.50 over three trading days.

What is the deadline for the MGPI securities class action lawsuit?

The deadline to apply as lead plaintiff in the MGPI securities class action lawsuit is February 14, 2025.

What period does the MGPI class action lawsuit cover?

The class action lawsuit covers investors who purchased MGPI stock between May 4, 2023, and October 30, 2024, known as the Class Period.

How much did MGPI stock fall on February 22, 2024?

MGPI stock fell $13.65 per share (nearly 15%) to close at $78.14 on February 22, 2024, following below-consensus guidance announcement.

What operational changes did MGPI announce on October 31, 2024?

On October 31, 2024, MGPI announced it would scale down whiskey production due to inventory challenges, leading to a 15% stock price decline to $48.04.