A class action lawsuit was filed against NET Power (NPWR) by Levi & Korsinsky on April 18, 2025. The plaintiffs (shareholders) alleged that they bought NPWR stock at artificially inflated prices between June 9, 2023 and March 7, 2025 (Class Period) and are now seeking compensation for their financial losses. Investors who bought NET Power stock during that period can click here to learn about joining the lawsuit.
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NET Power is helping in the clean energy transition through its zero-emissions natural gas power generation technology. The company also has a patented process for generating reliable electricity from natural gas with near-zero emissions and displays this technology at its La Porte, Texas facility, also known as “Demonstration Plant.”
The company is currently working on building its first utility-scale plant for this technology, named “SN1” or “Project Permian.” NET Power’s claims about this SN1 plant are at the heart of the current complaint.
NET Power’s Misleading Claims
According to the lawsuit, NET Power and three of its current and/or former senior officers (the Defendants) repeatedly made false and misleading public statements throughout the Class Period. Particularly, they are accused of omitting truthful information about the cost and completion of Project Permian from SEC filings and related material.
For instance, at the beginning of the Class Period, the company noted that it was making meaningful progress on Project Permian. Meanwhile, the CEO stated during a conference call that the company’s current estimate for the project was roughly $950 million.
Additionally, the company warned in a quarterly report that, to date, Project Permian had not witnessed any potential supply chain issues related to the manufacturing and transportation of key equipment. However, any future material disruption in the supply chain could impact its operating results, capital resources, and the project’s commercialization efforts.
Finally, in the certifications accompanying the quarterly report, the CEO and former CFO affirmed that the document “does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.”
However, subsequent events (discussed below) revealed that NET Power had failed to inform investors about the potential challenges involved in completing Project Permian within the stipulated timeframe.
Plaintiffs’ Arguments
The plaintiffs maintain that the defendants deceived investors by lying and withholding critical information about the business practices and policies during the Class Period. Importantly, the defendants are accused of misleading investors about the higher costs involved in building Project Permian and the potential supply chain issues.
The information became clear on March 10, 2025, when NET Power released disappointing results for Q4FY24. In the press release, the company projected the total installed costs for Project Permian to be between $1.7 billion and $2.0 billion, significantly higher than its prior estimates. The increased cost was due to the inclusion of “non-recurring first-of-a-kind, Project Permian site-specific and owner costs.”
Furthermore, NET Power mentioned that the timeline for Project Permian had been delayed and the project would now come online “no earlier than 2029.” Following the news, NPWR stock plunged 31.5% that same day and another 32.2% the next day.
To conclude, the defendants allegedly misled investors regarding the potential costs, supply chain challenges, and timeline of Project Permian. Owing to these issues, NPWR stock has lost 84.7% year-to-date, causing massive damage to shareholder returns.
