Legal Analysis: Undisclosed Business Weakness & Risk The complaint details the alleged gap between the Company's public statements about sustainable growth and the undisclosed material adverse facts regarding its operational and financial stability. | Disclosure Event | Impact on KMX Stock Price | Alleged Securities Violation Revealed | | --- | --- | --- | | Q2 2026 Earnings | Stock fell 20%; comparable | Misrepresenting the nature of demand; failing to disclose | | (Sept. 25, 2025) | unit sales down 6.3%. ...

Core Viewpoint - The lawsuit against CarMax, Inc. alleges that the company misled investors by presenting unsustainable growth as robust and failing to disclose significant risks in its loan portfolio [2][4]. Group 1: Allegations and Legal Context - The lawsuit claims that CarMax executives provided materially false information regarding the company's growth, which was attributed to a temporary "pull forward" of customer demand [2][3]. - The investigation is focused on whether CarMax prioritized short-term optics over transparency, particularly regarding a one-time tariff event that influenced reported growth [3]. - The complaint highlights a significant increase in the loan loss provision for the CarMax Auto Finance (CAF) portfolio, indicating potential undisclosed weaknesses in the business [3][4]. Group 2: Impact on Stock Price - Following the Q2 2026 earnings report, CarMax's stock fell by 20%, with comparable unit sales down by 6.3%, revealing misrepresentation of demand sustainability [5]. - The departure of the CEO and weak Q3 guidance led to a 24% drop in stock price, further indicating undisclosed business weaknesses [5]. - An increase of $142 million in the loan loss provision for the CAF portfolio was reported, suggesting misrepresentation of the quality and risk associated with the loan portfolio [5]. Group 3: Investor Actions and Next Steps - Investors who purchased CarMax securities between June 20, 2025, and November 5, 2025, are encouraged to contact the law firm for potential claims related to significant losses [5][6]. - The deadline for investors to move the court for appointment as lead plaintiff is January 2, 2026 [1][7]. - Hagens Berman has a history of securing substantial settlements for investors, totaling over $325 billion [6].