Pomerantz Law Firm Reminds Shareholders with Losses on their Investment in Vroom, Inc. of Class Action Lawsuit and Upcoming Deadline – VRM

NEW YORK, April 24, 2021 (GLOBE NEWSWIRE) – Pomerantz LLP announces that a class action lawsuit has been filed against Vroom, Inc. (“Vroom” or the “Company”) (NASDAQ: VRM) and some of its officers. The class action lawsuit, filed in the U.S. District Court for the Southern District of New York and filed under 21-cv-03296, is directed to a class composed of all persons and entities, except defendants, who purchased or otherwise acquired Vroom securities have between June 9, 2020 and March 3, 2021, both dates inclusive (the “Class Period”), to take remedial action under the Securities Exchange Act of 1934 (the “Exchange Act”).

If you are a shareholder who purchased Vroom securities during the class period, you have until May 21, 2021 to request the court to appoint you as the lead plaintiff for the class. A copy of the complaint is available at www.pomerantzlaw.com. To discuss this promotion, contact Robert S. Willoughby at newaction@pomlaw.com or toll free 888.476.6529 (or 888.4-POMLAW) ext. 7980. Those who inquire by email are encouraged to give their Provide postal address, telephone number and the number of shares purchased.

[Click here for information about joining the class action]

Vroom was founded in 2013 and is based in New York, New York. The company is an e-commerce platform that buys and sells used vehicles. The company’s online platform allows consumers to research and select thousands of fully refurbished vehicles. After purchasing a vehicle, the company delivers contactlessly to the buyer’s driveway.

Vroom became a public company through an initial public offering on June 9, 2020 (the “Initial Public Offering”). Prior to going public, Vroom reduced its inventory significantly to accommodate an expected drop in demand as a result of the COVID-19 pandemic.

The complaint alleges that throughout the class period, defendants made materially false and misleading statements about the company’s business. Specifically, Defendants made false and / or misleading statements and / or failed to disclose that: (i) a shortage of inventory would affect Vroom’s ability to grow sales in Q2 2020 and meet increasing customer demand for online used vehicles; had severely restricted ;; (ii) Vroom had cut the average sales price per vehicle by more than 15% in response to a continued and profound market shift towards cheaper vehicles, and not just because of the company’s temporary inventory reduction activities earlier in the year. (iii) Vroom’s lack of adequate sales and support staff had resulted in a deterioration in the customer experience, missed sales opportunities and an increase in average sales days for Vroom products by more than 10%. (iv) As a result of all of this, Vroom had to spend tens of millions of dollars building inventory and strengthening its sales, support and logistics networks, which severely affected the company’s near-term profitability. (v) As a result of all of this, Vroom had significantly lower earnings per vehicle and was poised to suffer accelerated losses and increased negative cash flows despite a robust online used car market. (vi) As a result of all of the foregoing, Vroom’s inventory growth had far exceeded the capabilities of its existing sales and support staff, creating a logistical bottleneck that threatened the company’s profits, the value of its existing inventory and its ability to generate positive results Cash flows; (vii) Due to all of the foregoing, Vroom was unable to sell a substantial portion of its existing inventory due to insufficient sales force and excessive reliance on third party sales support. (viii) As a result of all of this, Vroom had been forced to record and liquidate existing inventory at fire sale prices. (ix) As a result of all of this, Vroom was on track to miss its already disappointing fourth quarter 2020 earnings and earnings guidance, and that forecast actually had no sound basis. and (x) as a result of all of the foregoing, the Company’s public statements at all relevant times have been materially false and misleading.

On August 12, 2020, Vroom issued a press release announcing its financial results for the second quarter of 2020 (the “Second Quarter 20 Press Release”). According to this press release, Vroom had only $ 253.1 million in revenue for the quarter. This represents a 3% decrease year over year, mainly due to a 17% decrease in the average vehicle sales price per e-commerce unit. Additionally, the second quarter 20 news release stated that Vroom would only expect average total revenue per ecommerce unit of just $ 23,500 for the third quarter, an average of 25% year-over-year product price decline. Because of that lower average price, Vroom said it had only an average gross profit per e-commerce vehicle of $ 314, a 75% year-over-year profit decline, and a projected average gross profit per unit of just $ 1,600-1,700 for the third quarter During the call for results to discuss these results, the defendants essentially confirmed that the price pressure on the company was not short-term, but rather reflected a fundamental shift in the market towards cheaper vehicles.

In the news, Vroom’s share price fell $ 12.64 per share, or 18.32%, to close at $ 56.37 per share on August 13, 2020 with a typically high trading volume of 6.8 million shares traded.

On November 11, 2020, Vroom released a press release announcing its financial results for the third quarter of 2020. This press release states that Vroom is expected to experience significantly higher losses in the fourth quarter of 2020, with adjusted losses before interest, taxes, depreciation, and amortization (“EBITDA”) increasing from $ 36 million in the third quarter of 2020 to an expected 48 $ Million in the middle, a sequential increase of 33%. During the accompanying request for results, the defendants stated that Vroom was suffering from a “bottleneck” in sales support and, despite the favorable market environment, had to invest heavily in expanding the company’s sales support and logistics networks in order to avoid restricted growth.

In the news, Vroom’s share price fell $ 5.31 per share, or 13.01%, to close at $ 35.49 per share on November 12, 2020 on an unusually high trading volume of 9.2 million shares traded.

Finally, on March 3, 2021, Vroom published a press release announcing its fourth quarter and full year financial results (the “Fourth Quarter / FY 20 Press Release”). This news release was the company’s third consecutive negative report since going public, and it revealed operational issues and financial results far worse than previously reported to investors. For the quarter, the Q4 / FY20 news release stated that Vroom suffered a net loss of $ 60.7 million, up 42% year over year. This was equivalent to a loss of $ 0.46 per share, which was outside of the defendants’ stated range and 20% below the median. The Q4 / FY 20 news release also stated that Vroom suffered an adjusted EBITDA loss of $ 55.9 million for the quarter, which was also outside of the defendants’ range and was $ 8 million below was the mean. The Q4 / FY20 news release also stated that Vroom had only made $ 1,821 gross profit per unit, which was outside of the range stated by defendants and 13% off midpoint, and made only $ 878 gross profit per vehicle which is a decrease of 13% year on year.

During the call to earnings to discuss the results held on the same day, Defendant Paul J. Hennessy (“Hennessy”), the Company’s chief executive officer, found that Vroom was under grave due to inadequate sales and support staff who had significant staff Backlog suffered and affected the company’s ability to sell existing inventory. Not only had those backlogs worsened the customer experience, but they also resulted in a significantly lower gross profit per unit and resulted in the average sales days per vehicle increasing 13% year over year to seventy-seven days. Defendants admitted that because of these sales restrictions, Vroom was operationally constrained and unable to keep up with demand. This had forced the company to liquidate aging inventory at fire sale prices in an attempt to cut profits significantly, or even lose it, despite a historically cheap online stake in the car market. Defendants went on to say that Vroom’s sales deficiencies were so severe that the deficiencies would limit the company’s profits well into the first quarter of 2021, even though Vroom allegedly tripled its sales force. Defendant Hennessy admitted, “We bought more inventory than we could actually handle and that excess inventory had to be moved in the fourth quarter and will continue to be moved in the first quarter.”

According to this information, Vroom’s share price fell $ 12.29 per share, or 28%, to close at $ 31.61 per share on March 4, 2021 with an unusually high trading volume of 19.6 million shares traded.

The Pomerantz law firm, with offices in New York, Chicago, Los Angeles and Paris, is recognized as one of the leading law firms in the fields of corporate, securities and antitrust litigation. Pomerantz Company was founded by the late Abraham L. Pomerantz, dean of class action lawsuits, and pioneered class action lawsuits. Today, more than 80 years later, the Pomerantz company continues its tradition of fighting for the rights of victims of securities fraud, fiduciary violations and corporate misconduct. The company has reclaimed numerous millions of dollars in damages on behalf of class members. See www.pomerantzlaw.com

CONTACT:
Robert S. Willoughby
Pomerantz LLP
rswilloughby@pomlaw.com
888-476-6529 ext. 7980

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