CarMax Faces Class Action Lawsuit Following 20.1% Stock Drop After Q2 Earnings Decline
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
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Source: Globenewswire
- Financial Performance Decline: CarMax reported a 6.0% year-over-year revenue decline in Q2 2026, with retail used vehicle revenues down 7.2% and total gross profit decreasing by 5.6%, primarily due to inventory right-sizing actions and a $71.3 million increase in loan loss provisions, highlighting significant market challenges faced by the company.
- Stock Price Impact: Following the earnings report, CarMax's stock plummeted by $11.45, or 20.1%, closing at $45.60 per share, resulting in substantial losses for investors and reflecting a pessimistic market sentiment regarding the company's future prospects.
- Lawsuit Allegations of Misrepresentation: The class action lawsuit alleges that the company made materially false and misleading statements during the class period, failing to disclose significant adverse facts about its business and operations, particularly regarding overstated growth prospects that misled investors.
- Investor Action Deadline: Investors must file a motion by January 2, 2026, to request lead plaintiff status in the class action, indicating a growing concern over corporate governance and transparency, which could impact future investor confidence.
KMX
$39.145+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: 39.180
Low
27.00
Averages
40.92
High
60.00
Current: 39.180
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.
