Key Takeaways:
A securities class action lawsuit filed against Peabody Energy Corp. alleges the coal producer misled investors about production at its flagship Centurion mine, wiping out $14.50 a share, or 36.7%, of market value between March 27 and May 5.
"The company repeatedly assured investors that full longwall production would commence by March 2026 while concealing mechanical, electrical and geological problems that made the timeline unachievable," the complaint filed in the U.S. District Court for the Eastern District of Missouri states. The case, McGeachy v. Peabody, et al., No. 26-cv-01020, asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.
Peabody on March 30 disclosed that Centurion, its premium hard coking coal mine in Queensland, Australia, delivered only 250,000 tons in the first quarter — a 64% shortfall from the 700,000 tons management had guided. The stock fell $3.82, or 9.7%, to $35.68 that day. On May 5, the company cut its full-year Centurion sales outlook to 2.5 million tons from 3.5 million tons and raised cost guidance to $123 to $133 a ton from $113. Shares dropped another $1.52, or 5.7%, to $25.00.
The lawsuit names Chief Executive Officer James C. Grech, Chief Financial Officer Mark A. Spurbeck and former President of Global Operations Marc E. Hathhorn as defendants. Peabody's metallurgical coal segment posted an adjusted EBITDA loss of $7 million in the first quarter, with the shortfall at Centurion reducing earnings by an estimated $80 million, according to the complaint. The class period covers investors who bought Peabody shares between Oct. 14, 2024 and May 4, 2026. The lead plaintiff deadline is Aug. 24.
The lawsuit adds legal overhang to a stock already trading near its lowest level since the disclosures. Peabody's next quarterly report, due in August, will show whether Centurion's ramp-up has improved or if further guidance cuts are needed.
This article is for informational purposes only and does not constitute investment advice.
