|Company Name||Carvana Co.|
|Class Period||May 06, 2020 to June 24, 2022|
|Lead Plaintiff Motion Deadline||October 03, 2022|
On August 10, 2021, media reported that Carvana’s dealer license was suspended for the Raleigh, North Carolina location for six months because “Carvana failed to deliver titles to the DMV, sold motor vehicles without a state inspection, and issued out-of-state temporary tags and plates for vehicles sold to customers in North Carolina.”
On this news, the Company’s stock fell $9.40, or 2.5%, to close at $360.70 per share on August 11, 2021, on unusually heavy trading volume.
Then, on October 22, 2021, before the market opened, The Wall Street Journal published an article entitled “Carvana Faces Government Scrutiny and Fines Following Consumer Complaints,” revealing that “[a]t least four states have disciplined Carvana or are investigating the company for violating vehicle-sales rules.”
On this news, the Company’s stock fell $9.53, or 3.15%, over two consecutive trading sessions to close at $292.23 per share on October 25, 2021, on unusually heavy trading volume.
Then, on June 24, 2022, after the market closed, Barron’s published an article entitled “Carvana Sought to Disrupt Auto Sales. It Delivered Undriveable Cars[,]” which stated that “[i]n its haste to seize market share from competitors, Carvana was selling cars faster than it could get them registered to their new owners.” By early 2021, Carvana increased staffing and “would use its dealer licenses across the country to issue temporary license plates from multiple states to customers” to deal with the delayed registrations. Moreover, “Carvana’s sense of urgency surrounding the title-transfer issues may be most apparent in its formation of the undriveable-car task force in May,” which reviewed a “‘giant spreadsheet’ of cars . . . that Carvana had been keeping on the road with temporary plates that were now expiring . . . .”
On this news, the Company’s stock fell $6.78, or 21%, over two consecutive trading sessions to close at $24.74 per share on June 28, 2022, on unusually heavy trading volume.
The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that Carvana faced ongoing issues with documentation, registration, and title for many of its vehicles across the country; (2) that, as a result, Carvana was issuing frequent temporary plates; (3) that the suspension of Carvana’s license in North Carolina was not a “relatively unusual” action and, in fact, the Company was under investigation by many states for violating laws and regulations regarding proper documentation and inspections; (4) that, as a result of the foregoing, there was a substantial risk to Carvana’s ability to continue business and/or expand its business in existing markets; (5) that Carvana was facing imminent regulatory action including license suspension in several states; (6) that, as a result of the foregoing, Carvana faced increased oversight in certain states, including Illinois; and (7) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
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