Carvana Co. (CVNA) Misled Investors in Connection With its Ability to Deliver Properly Registered Cars
A shareholder filed a class action on behalf of all persons and entities that purchased or otherwise acquired Carvana Co. (NYSE: CVNA) securities between May 6, 2020 and June 24, 2022, for violations of the Securities Exchange Act of 1934. Carvana, along with its subsidiaries, is an e-commerce platform for buying and selling used cars in the United States.
According to the complaint, defendants made false and misleading statements and failed to disclose that: (i) Carvana faced serious, ongoing issues with documentations, registration, and title with many of its vehicles; (ii) as a result, Carvana was issuing unusually frequent temporary plates; (iii) thus, Carvana was violating laws and regulations in many existing markets; (iv) consequently, Carvana risked its ability to continue business and/or expand its business in existing markets; (v) as such, Carvana was at an increased risk of governmental investigation and action; (vi) Carvana was in discussions with state and local authorities regarding the above-stated business tactics and issues; and (vii) Carvana was facing imminent and ongoing regulatory actions including license suspensions, business cessation, and probation in several states and counties including in Arizona, Illinois, Pennsylvania, Michigan, and North Carolina.
On June 24, 2022, Barron’s published an article entitled “Carvana Sought to Disrupt Auto Sales. It Delivered Undriveable Cars[,]” which detailed several issues with Carvana, including 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” and “at one point form[ed] an ad hoc unit known as the ‘undriveable-car task force.'” The article further stated that “state regulators across the U.S. have been subjecting the company to suspensions or increased oversight over registration delays and its practice of issuing multiple temporary license plates from states where it has dealer’s licenses, instead of promptly providing permanent ones.” On this news, the Company’s stock price fell $6.78, or 21.5%, per share over the next two trading days to close at $24.74 per share on June 28, 2022.
Next Steps: If you acquired your shares of Carvana Co. between May 6, 2020 and June 24, 2022, you have until October 3, 2022, to ask the court to appoint you lead plaintiff for the class. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. You do not have to participate in the case to be eligible for a recovery.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.