Investigation of Vroom, Inc.

Vroom, Inc. (VRM) is Accused of Misleading Investors About its Ability to Meet Demand for its Vehicles

According to a class action complaint filed on behalf of purchasers of Vroom, when Vroom announced its third quarter 2020 financial results on November 11, 2020, the Company “expect[ed] another quarter of significant year-over-year growth in ecommerce unit sales and revenue for Q4 2020 and continued strength in total ecommerce gross profit per unit.”  On a conference call the same day, Vroom’s CEO stressed that demand was strong and noted that the Company was “ramp[ing] up our sales support in anticipation of continued escalating sales growth in the New Year.”

On March 3, 2021, Vroom announced its fourth quarter and full year 2020 financial results. The Company reported that fourth quarter “Ecommerce Vehicle gross profit per unit decreased 13.1% to $878, driven primarily by lower sales margins, partially offset by improvements in inbound logistics and reconditioning costs per unit.”  Vroom also reported that its “[n]et loss increased 41.9% to $60.7 million.”  Contrary to its statements just months prior that it could scale growth to meet the demand for product, the Company explained, “due to the constraints in sales personnel and sales support personnel, we were unable to convert and process the sales associated with that demand.  The result is that our inventory aged.  That aged inventory need to be discounted to move through our retail channels or liquidated in our wholesale channels.”  On this news, the Company’s stock price fell $12.29 per share, or 27.9%, to close at $31.61 per share on March 4, 2021. 

Vroom, Inc. (VRM) shareholders have legal options.  If you own shares of Vroom, Inc., contact us to learn more about your rights. 

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