Driven Brands Holdings Inc. (DRVN) Misled Investors Regarding its Ability to Integrate its U.S. Auto Glass Business and the Performance of its Car Wash Segment
A shareholder filed a class action on behalf of all purchasers of Driven Brands Holdings Inc. (NASDAQ: DRVN) common stock between October 27, 2021 and August 1, 2023. Driven is the largest automotive services company in North America, providing customers with a range of automotive needs, including paint, collision, glass, oil change, maintenance, and car wash.
According to the complaint, during the class period, Driven repeatedly touted its ability to execute and integrate acquisitions as a “core strength,” and assured investors that it had made “significant progress” integrating the auto glass businesses it had acquired. The Company also represented that the large scale of its car wash business served as a “competitive moat” that would preserve Driven’s competitive position. In truth, Driven was “several quarters” behind on integrating its auto glass businesses, and the Company’s car wash business was faltering and more exposed to a decline in demand from retail customers than it represented to investors. As a result, the Company’s statements concerning its business and prospects, including its fiscal year 2023 financial guidance, lacked a reasonable basis.
Plaintiff alleges that the truth began to emerge on May 8, 2023, when Driven announced that, on May 4, 2023, the Company’s former Chief Financial Officer Tiffany L. Mason abruptly and inexplicably left the Company, just one day after Driven reported its financial results for the first quarter of 2023 and Mason participated in the Company’s corresponding earnings call. In the wake of Mason’s abrupt departure, Driven reaffirmed its financial guidance for fiscal 2023.
Then, on August 2, 2023, Driven reported earnings for the second quarter of 2023 that missed expectations, including disappointing results for both its Paint, Collision and Glass and Car Wash business segments. The Company also slashed its earnings guidance for fiscal 2023. Driven attributed its earnings miss and guidance cut to delays in the integration of its acquired auto glass businesses and increased exposure to “intensified competitive intrusion” in its Car Wash segment, which negatively impacted consumer demand and the Company’s margins. These disclosures caused the price of Driven common stock to decline by $10.63 per share, or 41%.
What Now: Similarly situated shareholders may be eligible to participate in the class action against Driven Brands Holdings Inc. Shareholders who want to act as lead plaintiff for the class should contact Robbins LLP. Plaintiffs must file their lead plaintiff papers by February 20, 2024. 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. If you choose to take no action, you can remain an absent class member.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.