Holley Inc.

On July 28, 2022, Holley announced its preliminary second quarter 2022 financial results, disclosing that sales had dropped 7% and adjusted profits had fallen by 31%. The Company also revised its full year 2022 outlook, reducing sales expectations by 8.4% and adjusted earnings by 26%. On this news, Holley’s stock price fell $4.68, or 36.9%, to close at $7.99 per share on July 29, 2022, thereby injuring investors.

Then, on August 11, 2022, Holley announced that its CFO had resigned to “pursue another opportunity and for personal reasons.”

Then, on November 14, 2022, the Company reported disappointing financial results for the third quarter 2022, with a 3% decline in net sales, a 25.8% decrease in gross profits, and over 50% less in earnings compared to the third quarter 2021. Holley also lowered its guidance for 2022 yet again. On this news, Holley’s stock price fell $0.22, or 6.9%, to close at $2.99 per share on November 14, 2022.

Then, on February 6, 2023, Holley announced that its CEO was retiring, effective immediately. On the same day, the Company released its preliminary fourth quarter and full year 2022 financial results, revealing that fourth quarter sales fell short of market estimates. On this news, Holley’s stock price fell $1.29, or 37.7%, over two consecutive trading days, to close at $2.13 per share on February 8, 2023, thereby injuring investors further.

The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (1) as a result of Holley's extensive focus on its direct-to-consumer ("DTC") channel, Holley's critically important relationships with its resellers and distributors, whose business made up the vast majority of Holley's revenue, were suffering significant damage; (2) Holley used discounting and other similar efforts to grow its DTC channel, which undermined the pricing discipline Holley historically had with its resellers and distributors, and further damaged Holley's relationship with its resellers and distributors; (3) as a result of Holley's strained relationships with its resellers and distributors, those resellers and distributors were decreasing their purchases of Holley products, returning products already purchased at significant levels that were far above historical norms, and increasing their purchases of competitors' products; (4) Holley's growing DTC channel could not offset the negative financial impact of Holley's increasingly strained relationships with its resellers and distributors and, as a result, Holley's critical relationship with resellers and distributors was deteriorating; (5) Holley had failed to successfully integrate and capture synergies from its numerous acquisitions, which left Holley with inefficient operations, excess costs, and inventory management problems; (6) Holly benefited from COVID-related stimulus money that temporarily boosted its sales and performance, and despite this unsustainable, temporary boost, defendants misled investors to believe the growth was sustainable and the result of persistent demand, and supportive of positive financial guidance; and (7) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.