CarLotz, Inc. (LOTZ, LOTZW) Accused of Making False and Misleading Statements Regarding its Business, Operations, and Prospects
CarLotz became a public entity via merger with Acamar Partners Acquisition Corp., a blank check company. According to a class action complaint filed on behalf of purchasers of CarLotz between December 30, 2020 and May 25, 2021, during this time, CarLotz publicly boasted its gross profits and gross profits per unit. While the Company addressed the potential risk of slowing sales in its SEC filings, it did not disclose that a slowdown in sales was already occurring.
On March 15, 2021, CarLotz announced its fourth quarter and full year 2020 financial results. In particular, the Company noted that gross profits and gross profit per unit “were softer than … expected” due to “the surge in inventory during the quarter and the resulting lower retail unit profitability.” On this news, the Company’s stock price fell 8.5% per share on March 16, 2021. On May 10, 2021, CarLotz announced its first quarter financial results for 2021, revealing that gross profits per unit fell below expectations. On this news, the stock price fell 14%, to close at $5.57 per share on May 11, 2021. The stock price continued to decline another 8%, to close at $4.12 per share on May 12, 2021.
Then, on May 26, 2021, CarLotz announced an update to its profit-sharing sourcing partner arrangement. Specifically, its “partner informed the Company that, in light of current wholesale market conditions, it has paused consignments to the Company.” This partner “accounted for more than 60% of the cars sold and sourced” during the first quarter 2021 and “less than 50% of the cars sold and approximately 25% of the cars sourced” during the second quarter 2021 to date. On this news, CarLotz’ stock price fell $0.70, or 13.4%, to close at $4.51 per share on May 26, 2021. The stock now trades below $4.00.
CarLotz, Inc. (LOTZ, LOTZW) shareholders have legal options. If you own shares of CarLotz, Inc., contact us for more information.
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