CarMax(US:KMX) Globenewswire·2025-12-17 02:02Core Viewpoint - The article discusses a securities class action lawsuit against CarMax, Inc. alleging that the company misled investors about its business stability and growth prospects, resulting in significant stock declines [2][4]. Summary by Sections Lawsuit Details - The lawsuit claims that CarMax and its executives concealed critical information regarding the company's operational challenges, leading to two major stock crashes [2][5]. - The class period for the lawsuit is defined as June 20, 2025, to November 5, 2025 [3]. Allegations - The complaint identifies two main issues that allegedly inflated the stock price: - Unsustainable Demand: CarMax reported strong growth for Q1 2026 but failed to disclose that this was due to a temporary surge in customer demand driven by anticipated tariffs [4]. - CarMax Auto Finance Risk: Management assured investors about the stability of their loan reserves, which later revealed a significant increase in loan loss provisions amounting to $142 million, a 40% sequential increase [4]. Impact on Business - The lawsuit highlights a distortion in core retail demand that could not be maintained in subsequent quarters, leading to a drastic cut in forward guidance and signaling systemic weaknesses in business operations [4]. - The stock experienced a 20% decline following the announcement of disappointing Q2 results, which included a 24% drop in net EPS and the unexpected loan loss provision [4]. Investor Actions - Investors who purchased CarMax securities during the class period and suffered losses are encouraged to contact Hagens Berman to discuss their rights and potential involvement in the lawsuit [5][6].