Sunrun is a San Francisco, California-based provider of residential solar electricity that claims to operate the “second largest fleet of residential solar energy systems” in the United States. In some states Sunrun offers customers either a lease or a Power Purchase Agreement (“PPA”), whereby homeowners pay for electricity that their solar panels produce but do not have to buy solar panels outright. Sunrun’s PPA business involves “net metering,” a billing mechanism that credits solar energy system owners for electricity they add to the grid.
On or around August 5, 2015, Sunrun completed its IPO of 17.9 million shares of common stock priced at $14.00 per share, for gross proceeds of $251 million.
The lawsuit alleges that defendants made false and/or misleading statements, and/or failed to disclose in Sunrun’s IPO prospectus and registration statement that: (a) Sunrun’s actual historical operating costs were understated by not identifying and disclosing the fixed grid costs that public utilities were bearing for it 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 its representation that it had customers dispersed across 15 states and the District of Columbia, 20% of Sunrun customers were concentrated in Nevada; (d) Sunrun’s PPA business was in jeopardy due to ongoing regulatory review of net metering programs in 20 of the 40 states that then permitted net metering; (e) Sunrun employed an unreasonably low discount rate of 6% in calculating the value of its retained assets and thus overstated 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 as indicated in the registration statement.
In the eight months since the IPO, as investors learned that Sunrun’s business metrics and financial prospects were not as strong as represented in the IPO registration statement, Sunrun stock has fallen precipitously, closing at $7.50 per share on May 6, 2016, when the initial federal securities class complaint was filed.
The law firm of Lieff Cabraser Heimann & Bernstein, LLP brought this class action litigation on behalf of investors who purchased or otherwise acquired the common stock of Sunrun Inc.