Ralliant shares plunge 28% on $1.4B goodwill impairment, SEC probe
Securities investigation centers on Test & Measurement segment's EA Elektro-Automatik acquisition as EV outlook darkens
Ralliant Corporation shares crashed 28% on Thursday after disclosing a $1.4 billion non-cash goodwill impairment that has triggered a federal securities investigation, wiping out nearly $2 billion in market value in a single session of trading.
The stock plummeted to $40.48 from its prior close of $56.28, marking one of the steepest single-day declines for a New York Stock Exchange-listed technology company this year. The selloff pushed the shares below their 52-week low of $40.97, down more than 40% from their peak above $67 reached in late 2025.
The goodwill impairment centers on Ralliant's Test & Measurement segment, specifically related to its EA Elektro-Automatik acquisition—a deal that now appears significantly overvalued given reduced forecasts for electric vehicle adoption. The $1.4 billion write-down represents roughly 27% of Ralliant's total market capitalization of $5.27 billion.
Of greater concern to investors, the company disclosed that the Securities and Exchange Commission has opened an investigation into potential securities law violations. The probe focuses on whether executives made misleading statements about the EV market's trajectory and the valuation of the EA Elektro-Automatik acquisition during investor presentations and earnings calls in 2025.
"The timing and magnitude of this impairment raises serious questions about what management knew and when they knew it," said analysts at several institutional firms. "Investors were told just months ago that EV adoption would accelerate through 2026, supporting the Test & Measurement segment's growth outlook."
The contradiction between current forecasts and previous executive commentary lies at the heart of the SEC's investigation. During Ralliant's third-quarter earnings call in October 2025, senior executives highlighted EA Elektro-Automatik's strategic importance, citing the company's position as a leading provider of power testing equipment for electric vehicle manufacturers. At the time, management expressed confidence in "sustained EV market expansion" through the end of the decade.
Those projections now appear dramatically overoptimistic. The $1.4 billion impairment suggests Ralliant believes EA Elektro-Automatik's future cash flows will be substantially lower than originally modeled, requiring an immediate balance sheet adjustment that surprised analysts and investors alike.
Analyst sentiment had already been mixed prior to Thursday's announcement. Of the seven analysts covering Ralliant, one rated the stock a strong buy, one recommended buy, four maintained hold ratings, and one rated it a strong sell. The consensus target price is not yet updated to reflect Thursday's plunge, but analysts at multiple firms are expected to downgrade the stock in coming days.
The Test & Measurement segment, which includes EA Elektro-Automatik, represented roughly 35% of Ralliant's revenue in its most recent fiscal year. The division provides specialized testing equipment for electronics manufacturing, automotive development, and energy storage systems—all sectors that have faced significant headwinds as electric vehicle growth has slowed more sharply than anticipated.
Ralliant's financial metrics had appeared strong before Thursday's disclosure. The company traded at a price-to-earnings ratio of 13.58 with earnings per share of $2.68. But the goodwill impairment and SEC investigation now cast doubt on the quality of those earnings and the sustainability of future profitability.
Legal experts suggest the SEC investigation could lead to significant penalties if regulators determine that executives knowingly made false or misleading statements about the EV market and the EA Elektro-Automatik acquisition's value. Securities law firm Block & Leviton has already announced it is investigating potential claims on behalf of investors who purchased Ralliant securities during the relevant period.
For now, investors face uncertainty on multiple fronts. The goodwill impairment directly impacts Ralliant's balance sheet strength and raises questions about the company's acquisition strategy. The SEC investigation creates overhang that could persist for months or longer, potentially depressing the stock regardless of fundamental business performance.
"This is a governance and credibility crisis as much as a financial one," said a portfolio manager at a major technology-focused investment firm. "Even if the business fundamentals remain intact, restoring investor confidence will require new leadership and a complete overhaul of disclosure practices."
Trading volume in Ralliant shares surged to more than 15 times the daily average, indicating heavy institutional selling. The stock opened sharply lower and continued to decline throughout the session, hitting an intraday low of $38.92 before recovering slightly to close at $40.16.
Thursday's move leaves Ralliant with a market capitalization of $5.27 billion, down more than $2 billion from Wednesday's close. The wipeout represents one of the largest single-day value destruction events for a mid-cap technology company since the 2022 market correction.