CarMax Faces Investor Lawsuits After Misleading Growth Projections
Richmond, Tuesday, 28 October 2025.
CarMax is under investigation for allegedly misleading investors about growth prospects, leading to stock drops of 17% to 20% amid rising loan losses. Legal actions are being considered.
Background of the Allegations
CarMax, Inc. (NYSE: KMX), a prominent player in the used car retail market, is currently under the spotlight for allegedly misleading investors about its growth outlook. The legal scrutiny is spearheaded by Bragar Eagel & Squire, P.C., a respected law firm specializing in shareholder rights. The firm asserts that CarMax failed to adequately disclose rising loan losses, which have significantly impacted the company’s stock value, falling by approximately 17% to 20% in recent months [1][2].
Financial Performance and Market Impact
The financial turbulence for CarMax began earlier this year when it released its Q4 fiscal year 2025 results on April 10, missing consensus estimates and announcing the removal of timeframes for its long-term goals. This announcement led to a 17% drop in its stock price. The situation worsened with the Q2 2026 results disclosed on September 25, revealing a 6.0% decline in revenue and further contributing to a 20.1% stock drop. These results were attributed to necessary inventory adjustments and a substantial increase in loan loss provisions amounting to $71.3 million [1][3].
Investor Reactions and Legal Proceedings
In response to these disclosures, investors have been prompted to consider legal actions, with Bragar Eagel & Squire, P.C. urging affected shareholders to explore their legal rights. The firm’s investigation aims to determine whether CarMax’s executive leadership engaged in securities fraud by providing overly optimistic growth projections while concealing adverse financial conditions. The potential for investor lawsuits underscores the broader implications of corporate transparency and the risks of inflated stock valuations based on misleading information [1][4].
Looking Forward
As CarMax prepares to report its upcoming quarterly results, the company faces heightened scrutiny from both investors and legal entities. The unfolding situation serves as a critical reminder of the importance of transparency in financial disclosures, particularly in volatile sectors like automotive retail. As the case develops, investors are advised to stay informed of their rights and options, with the lead plaintiff deadline for related lawsuits set for December 15, 2025 [1][5].