In the current economic environment, companies are wrestling with a host of macroeconomic issues, including rising interest rates, economic inflation, continuing labor shortages, and the war in Ukraine. In addition, another issue companies are facing in the wake of the pandemic is supply chain disruption, which continues to challenge some companies. In the latest sign of ways in which these macro factors can translate into securities litigation, earlier this week the fuel cell company Plug Power was hit with a securities class action lawsuit after its share price declined following the company’s announcement of disappointing financial results driven in part by supply chain issues. A copy of the April 12, 2023, complaint filed against Plug Power can be found here.


Plug Power is a hydrogen fuel cell company that develops power systems for use in electric vehicles. In August 2022, when releasing its 2Q22 financial results, the company emphasized its “strong business outlook” as well as the strength of its supply chain, noting that the company did “not foresee supply chain issues this year.”

However, in October 2022, the company forewarned that its 2022 revenues could be as much as 10% below prior projections, as some projects previously scheduled for 2022 completion were now slated for 2023 completion. The company’s share price declined 6% on this news.

On January 25, 2023, despite what the complaint characterized as “previous assurances that revenue growth would be at least 60% on a year-over -year basis,” the company “revealed” that it now expected to generate revenue growth of just 45% to 50% for 2022. The company’s CEO explained that “new products came out a little slower than we hoped” and manufacturing issues “added complexity to supply chain.” The company’s share price declined another 6% on this news.

On March 1, 2023, when the company release its financial results for the fourth quarter and full year 2022, the company announced revenue growth of just over 40%, “missing even the reduce guidance range” provided just weeks earlier. The company’s share price declined another 6% on the news.

The Lawsuit

On April 12, 2023, a plaintiff shareholder filed a securities class action lawsuit in the District of Delaware against Plug Power and certain of its directors and officers. The complaint purports to be filed on behalf of investors who purchased securities of Plug Power between August 9, 2022, and March 1, 2023.

The complaint alleges that during the class period, the defendants misrepresented or failed to disclose that the Company “was unable to effectively manage its supply chain and product manufacturing, resulting in reduced revenues and margins, increased inventory levels, and several large deals being delayed until at least 2023, among other issues.” As a result, the complaint alleges, “Defendants statements about the Company’s business, operations, prospects, and ability to effectively manage its supply chain and production lacked a reasonable basis.”

The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks to recover damages on behalf of the plaintiff class.


One of the consequences from the pandemic outbreak was a huge disruption in the global supply chain. Although the Wall Street Journal reported earlier this year that supply chain issues have largely resolved for many companies and many industries, supply chain issues continue to affect many companies, and it appears that in late 2022, supply chain issues disrupted this company’s operations.

As I noted at the outset, supply chain issues are only one of several macroeconomic issues disrupting companies in the current business environment. In many cases, these macro challenges have translated into securities lawsuits, including challenges related to supply chain issues. For example, last month retailer Target Corp. was hit with a securities suit, after the company reported that its response to earlier supply chain issues had resulted in an inventory overhang. A similar fact-pattern previously led to a securities lawsuit against tool maker Stanley Black & Decker, involving similar allegations. In 2022, supply chain related issues led to securities suits against Tupperware (here), Torrid Holdings (here), FIGS, Inc. (here), and Cerence (here).

It is entirely possible – and indeed seems likely – that as the pandemic-caused disruption in the global supply chain continues to ease, not only will companies generally experience fewer and less severe supply chain issues, but the phenomenon of supply chain-related securities lawsuit filings should ease as well. In that regard, it is noteworthy that while Plug Power is only now being sued in April 2023, the supply chain issues that disrupted its operations appear to have taken place in the third and fourth quarters of 2022. It may be that as we move forward in time, earlier supply chain issues will have less affect on operations and are less likely to translate into securities lawsuits.

That said, other macroeconomic factors, especially interest rate increases and economic inflation, are likely to continue to create difficulties for operating companies, and may continue to translate into securities suits. The March 2023 collapse of Silicon Valley Bank and the subsequent securities litigation filings (discussed here) provide a rather stark example of the ways that interest rate issues can undermine company operations and financial results and result in securities litigation.

This new lawsuit has only just been filed and it remains to be seen how it will fare. That said, however, I think it is fair to point out that when the time comes for the sufficiency of the plaintiff’s allegations to be put to the test, the Court will have to look long and hard to find anything in this complaint responsive to the plaintiff’s allegations to present sufficient allegations of scienter.

What a world we live in where a company that produced revenue growth of “only” 40% is getting hit with a securities suit.