March 22, 2021 - An investor in shares of Vroom, Inc. (NASDAQ: VRM) filed a lawsuit in the U.S. District Court for the Southern District of New York over alleged violations of Federal Securities Laws by Vroom, Inc. in connection with certain allegedly false and misleading statements made between November 11, 2020 and March 3, 2021.
New York based Vroom, Inc. operates an e-commerce platform for buying, selling, and trading of new and used cars in the United States.
On March 3, 2021, Vroom, Inc. announced its fourth quarter and full year 2020 financial results in a press release. Vroom, Inc. reported that its annual Total Revenue rose from over $1.19 billion in 2019 to over $1.35 billion in 2020, and that its Net Loss increased from $142.97 million in 2019 to $202.79 million in 2020.
Furthermore, Vroom, Inc 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 for the fourth quarter, its "[n]et loss increased 41.9% to $60.7 million."
Shares of Vroom, Inc. (NASDAQ: VRM) declined from $51.71 per share on February 16, 2021, to as low as $26.96 per share on March 5, 2021.
According to the complaint the plaintiff alleges on behalf of purchasers of Vroom, Inc. (NASDAQ: VRM) common shares between November 11, 2020 and March 3, 2021, that the defendants violated Federal Securities Laws. More specifically, the plaintiff claims that between November 11, 2020 and March 3, 2021, the Defendants failed to disclose to investors, that Vroom had not demonstrated that it was able to control and scale growth in respect to its salesforce to meet the demand for its products, that, as a result, the Company was forced to discount aged inventory to move through its retail channels or liquidated in its wholesale channels, that, as a result, the ecommerce gross profit per unit was reasonably likely to decline, and that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.