Core Viewpoint - CarMax, Inc. experienced a significant stock decline of nearly 20% following the unexpected increase in loan loss provisions in its CarMax Auto Finance segment, raising concerns about the quality of its loan portfolio [1][6][7]. Financial Performance - The second-quarter 2026 financial results revealed a loan loss provision of $142 million, marking a sequential increase of nearly 40% and a year-over-year rise of approximately 24% [6]. - CarMax's financial results missed analysts' consensus estimates for GAAP EPS and revenue, primarily due to the increased loan loss provision [6]. Management Assurances - Prior to the Q2 2026 report, management had stated during the first-quarter 2025 earnings call that the provision of $101.7 million would likely be the "high watermark" for the year, expressing confidence in the reserve adjustments made [5]. - The recent provisioning increase contradicted these earlier assurances, as management acknowledged deteriorating credit trends that had begun to emerge in Q1 [7]. Investigation and Legal Actions - Hagens Berman, a national shareholders rights firm, has initiated an investigation into whether CarMax misled investors regarding the quality of its loan portfolio [2][3]. - The investigation is focused on the propriety of CarMax's disclosures about the quality of its loan portfolio, which includes older vintage loans and new originations [3][8].