CarMax Faces Class Action for Securities Fraud After 20% Stock Drop
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 01 2025
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Source: Globenewswire
- Lawsuit Initiation: Bleichmar Fonti & Auld LLP has filed a class action against CarMax and its executives for securities fraud following a significant stock drop, with investors encouraged to apply to lead the case by January 2, 2026.
- Poor Financial Performance: In its Q2 FY2026 report, CarMax revealed a 5.4% decline in retail used unit sales and a drop in net income from $132.8 million last year to $95.4 million, indicating demand was artificially boosted by tariff announcements.
- Stock Price Volatility: On September 25, 2025, CarMax's stock plummeted 20% from $57.05 to $45.60 due to disappointing earnings, reflecting market concerns about the company's future outlook.
- Executive Turnover Impact: The unexpected departure of CEO Bill Nash on November 6, 2025, coupled with a weak preliminary Q3 outlook, led to an additional 24% drop in stock price, exacerbating investor anxiety.
KMX
$38.47+Infinity%1D
Analyst Views on KMX
Wall Street analysts forecast KMX stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for KMX is 40.92 USD with a low forecast of 27.00 USD and a high forecast of 60.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
17 Analyst Rating
2 Buy
12 Hold
3 Sell
Hold
Current: 39.340
Low
27.00
Averages
40.92
High
60.00
Current: 39.340
Low
27.00
Averages
40.92
High
60.00
About KMX
CarMax, Inc. is a retailer of used autos. The Company operates through two segments: CarMax Sales Operations and CarMax Auto Finance (CAF). The CarMax Sales Operations segment consists of all aspects of its auto merchandising and service operations. The CarMax Sales Operations segment sells used vehicles, purchases used vehicles from customers and other sources, sells related products and services, and arranges financing options for customers. The CAF segment consists solely of its own finance operation that provides financing for customers buying retail vehicles from the Company. The CAF segment also services all auto loans, it originates and is responsible for providing billing statements, collecting payments, maintaining contact with delinquent customers, and arranging for the repossession of vehicles securing defaulted loans. It provides customers with a range of other related products and services, including extended protection plan (EPP) products and vehicle repair services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
