Bragar Eagel & Squire, P.C. Announces That a Class Action Lawsuit Has Been Filed Against CarLotz, Inc. and Encourages Investors to Contact the Firm
NEW YORK, July 10, 2021 – (BUSINESS WIRE) – Bragar Eagel & Squire, PC, a nationally recognized shareholder rights law firm, announces that a class action lawsuit has been filed against CarLotz, Inc. (NASDAQ: LOTZ) in the United States District Court for the Southern District of New York on behalf of those who have purchased or otherwise acquired publicly traded CarLotz securities between December 30, 2020 and May 25, 2021 (the “Classification Period”). Investors have until September 7, 2021 to apply to the court for appointment as the lead plaintiff in the proceedings.
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On March 15, 2021, CarLotz announced its fourth quarter and full year 2020 financial results. During a related conference call, the company stated that gross profit and gross profit per unit (“GPU”) were “weaker than … expected” due to “the increase in inventory levels during the quarter and the resulting lower profitability of retail units.” CarLotz also reported that the extra inventory “created a jam that resulted in slower processing and higher sales days”.
Due to this news, the company’s share price fell $ 0.79, or 8.5%, on an unusually high trading volume, to close at $ 8.45 per share on March 16, 2021. The stock price fell a further $ 0.62, or 7.3%, for the next two consecutive trading sessions, closing at $ 7.83 per share on March 18, 2021 with unusually high trading volume.
Then, on May 10, 2021, after the market closed, CarLotz announced its financial results for the first quarter of 2021, which showed that gross profit per unit was below expectations. Specifically, the company had expected retail GPUs between $ 1,300 and $ 1,500 but reported $ 1,182.
Based on this news, the company’s share price fell $ 0.94, or 14%, on an unusually high trading volume, and closed at $ 5.57 per share on May 11, 2021. The stock price continued to fall $ 0.45, or 8%, to close at $ 4.12 per share on May 12, 2021 due to unusually high trading volume.
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Then, on May 26, 2021, before the market opened, CarLotz announced an update to its with-profits agreement. Specifically, CarLotz stated that its “with-profits partner for the procurement of company vehicles has informed the company that it has suspended deliveries to the company in light of current wholesale market conditions”. In addition, this partner accounted for “more than 60% of the cars sold and procured” in the first quarter of 2021 and “less than 50% of the cars sold and approximately 25% of the cars procured” in the second quarter of 2021 to date.
As a result of this news, the company’s share price fell $ 0.70, or 13.4%, due to an unusually high trading volume, and closed at $ 4.51 per share on May 26, 2021.
The complaint filed in this class action lawsuit alleges that during the collection period the defendants made materially false and / or misleading statements and disclosed material adverse facts about the company’s business, operations and prospects. In particular, Defendants made material misrepresentations regarding: (1) that CarLotz experienced a “deadlock” due to a spike in inventory in the second half of FY 2020, resulting in slower processing and higher sales days; (2) that it would adversely affect the gross profit per unit of the company; (3) that the company offered aggressive pricing to minimize returns to the company’s vehicle sourcing partner who is responsible for more than 60% of CarLotz’s inventory; (4) that as a result, CarLotz’s gross profit per unit forecast was likely to have been inflated; (5) that company’s corporate vehicle sourcing partner would likely suspend supplies to the company due to market conditions, including rising wholesale prices; and (6) as a result, Defendants’ statements about their business, operations and prospects were materially false and misleading and / or were inadequate at all relevant times.
If you have bought or otherwise acquired CarLotz stock and have suffered a loss, are a long-term shareholder, have information, want to learn more about these claims, or have questions about this release or your rights or interests in relation to these matters, please contact Brandon Walker, Melissa Fortunato or Marion Passmore by email at email@example.com, by phone at (212) 355-4648, or by completing this contact form. There are no costs or obligations for you.
About Bragar Eagle & Squire, PC:
Bragar Eagel & Squire, PC is a nationally recognized law firm with offices in New York, California and South Carolina. The firm represents private and institutional investors in commercial, securities, derivatives and other complex litigation in state and federal courts across the country. More information about the company can be found at www.bespc.com. Lawyer advertising. Previous results do not guarantee similar results.
View source version on businesswire.com: https://www.businesswire.com/news/home/20210709005489/en/
Bragar Adler & Knappe, PC
Brandon Walker, Esq.
Melissa Fortunato, Esq.
Marion Passmore, Esq.