CarMax Shares Plummet Following CEO Termination and Dismal Financial Projections
On November 6, 2025, investors of CarMax, Inc. (NYSE: KMX) faced a shocking drop in their shares, plummeting by as much as $9.48, marking a stark 23% decrease during the trading day. The decline followed the announcement that CEO Bill Nash had been terminated from his position and would leave the Board effective December 1, 2025. This event sparked immediate worries among investors about the company's future stability and trajectory.
In addition to the sudden leadership change, CarMax released disappointing preliminary results for the third quarter of 2026. The company's report indicated a daunting forecast, projecting a decrease in comparable store unit sales between 8% to 12%, along with earnings per share (EPS) estimated to fall between $0.18 and $0.36. These figures were notably below market expectations, with analysts having anticipated an EPS of around $0.69. An analyst who reviewed the data suggested that it reflected a "heightened degree of share loss and margin pressure that is likely to take a while to arrest," raising concerns about the company's ability to recover amid ongoing challenges.
These troubling announcements have coincided with the filing of a securities class action lawsuit. Hagens Berman, a national law firm specializing in representing shareholder rights, is currently investigating claims against CarMax concerning potential misleading communications related to the company’s business model and growth potential.
The context of the allegations is particularly focused on events that transpired earlier in 2025. On June 20, CarMax had confidently reported double-digit EPS growth for the first quarter of 2026, claiming that its position in a fragmented market would allow the company to continue driving sales and expanding market share. However, the lawsuit accuses the company of misleading investors and failing to disclose that the strong Q1 results resulted from consumers advancing their vehicle purchases to evade tariffs, which provided only a temporary boost to sales figures but did not reflect sustainable growth.
The situation worsened for CarMax on September 25, 2025, when the company reported exceptionally poor results for the second quarter of 2026. With a staggering 24% drop in net EPS compared to the previous year, and a 6.3% decrease in comparable store used unit sales, investors were understandably rattled. The company also revealed that its CarMax Auto Finance (CAF) division had encountered difficulties, with an 11.02% revenue decline rooted in a $142 million loan loss provision, a stark increase from prior projections.
These findings triggered a sharp drop of around 20% in CarMax shares, as investors expressed their concerns regarding not only the company's earnings but also the overall quality of its loan portfolio, leading to further anxiety about CarMax’s performance and strategic direction.
As Hagens Berman continues its investigation, the firm encourages investors who experienced substantial losses due to their investment in CarMax to come forward. Those who acquired CarMax securities from June 20, 2025, to September 24, 2025, are particularly urged to assess their options, as the lead plaintiff deadline is set for January 2, 2026. Additionally, whistleblowers with non-public information about CarMax are invited to participate in the investigation, with the SEC Whistleblower program offering potential financial incentives for information leading to successful recoveries.
Hagens Berman stands as a champion of corporate accountability, having secured over $2.9 billion in settlements for clients affected by corporate misconduct. The firm remains committed to examining whether CarMax management deliberately misled investors regarding its business operations and future prospects. With the implications of the current investigation still unfolding, it remains paramount for affected parties to stay informed about their rights and the avenues available for possible redress.
For more information, visit Hagens Berman's dedicated page for CarMax investors to learn more about the ongoing developments and their potential compensation avenues. As the situation continues to evolve, the focus on CarMax's operational integrity and market viability is likely to intensify, making it a significant case study for investors and analysts alike.
In addition to the sudden leadership change, CarMax released disappointing preliminary results for the third quarter of 2026. The company's report indicated a daunting forecast, projecting a decrease in comparable store unit sales between 8% to 12%, along with earnings per share (EPS) estimated to fall between $0.18 and $0.36. These figures were notably below market expectations, with analysts having anticipated an EPS of around $0.69. An analyst who reviewed the data suggested that it reflected a "heightened degree of share loss and margin pressure that is likely to take a while to arrest," raising concerns about the company's ability to recover amid ongoing challenges.
These troubling announcements have coincided with the filing of a securities class action lawsuit. Hagens Berman, a national law firm specializing in representing shareholder rights, is currently investigating claims against CarMax concerning potential misleading communications related to the company’s business model and growth potential.
The context of the allegations is particularly focused on events that transpired earlier in 2025. On June 20, CarMax had confidently reported double-digit EPS growth for the first quarter of 2026, claiming that its position in a fragmented market would allow the company to continue driving sales and expanding market share. However, the lawsuit accuses the company of misleading investors and failing to disclose that the strong Q1 results resulted from consumers advancing their vehicle purchases to evade tariffs, which provided only a temporary boost to sales figures but did not reflect sustainable growth.
The situation worsened for CarMax on September 25, 2025, when the company reported exceptionally poor results for the second quarter of 2026. With a staggering 24% drop in net EPS compared to the previous year, and a 6.3% decrease in comparable store used unit sales, investors were understandably rattled. The company also revealed that its CarMax Auto Finance (CAF) division had encountered difficulties, with an 11.02% revenue decline rooted in a $142 million loan loss provision, a stark increase from prior projections.
These findings triggered a sharp drop of around 20% in CarMax shares, as investors expressed their concerns regarding not only the company's earnings but also the overall quality of its loan portfolio, leading to further anxiety about CarMax’s performance and strategic direction.
As Hagens Berman continues its investigation, the firm encourages investors who experienced substantial losses due to their investment in CarMax to come forward. Those who acquired CarMax securities from June 20, 2025, to September 24, 2025, are particularly urged to assess their options, as the lead plaintiff deadline is set for January 2, 2026. Additionally, whistleblowers with non-public information about CarMax are invited to participate in the investigation, with the SEC Whistleblower program offering potential financial incentives for information leading to successful recoveries.
Hagens Berman stands as a champion of corporate accountability, having secured over $2.9 billion in settlements for clients affected by corporate misconduct. The firm remains committed to examining whether CarMax management deliberately misled investors regarding its business operations and future prospects. With the implications of the current investigation still unfolding, it remains paramount for affected parties to stay informed about their rights and the avenues available for possible redress.
For more information, visit Hagens Berman's dedicated page for CarMax investors to learn more about the ongoing developments and their potential compensation avenues. As the situation continues to evolve, the focus on CarMax's operational integrity and market viability is likely to intensify, making it a significant case study for investors and analysts alike.
Topics Financial Services & Investing）
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