Vroom, Inc.

Investigation
03/22/2021

Initial Lawsuit
03/22/2021

Lawsuit Progression
08/05/2021

Investigation

Continous Holding
November 11, 2020 to March 3, 2021
Proposed Claim
Securities Violation

Investigation regarding Vroom’s statements about its salesforce growth to meet demand for its products and subsequent liquidation of aged inventory.

Main Event

Aged Inventory - Liquidated

03/03/2021

SEC Filing

Vroom releases its Q4 and fiscal year 2020 financials results showing, among other information, a decrease in average selling price per unit and a decrease in ecommerce vehicle gross profit per unit.

During the conference call, CEO Hennessy explained the following:
“As you saw in our fourth-quarter results and in our first-quarter guidance, we had lower gross profit per unit levels than we anticipated. In addition to greater depreciation than we expected, the lower gross profit per unit is also because we were buying inventory in anticipation of and align with our demand. The demand arrived as expected, but 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 needed to be discounted to move through our retail channels or liquidated in our wholesale channels.“

The stock impact compares the closing price immediately preceding the date of the event and the following closing price. The price difference also reflects the overall mix of information.

Stock Impact

Close	Previous close	Price variation	Percentage variation
$31.61	$43.9	$-12.29	-28%

See more on Factual Timeline

Initial Lawsuit

This is a class action on behalf of persons and entities that purchased or otherwiseacquired Vroom securities between November 11, 2020 and March 3, 2021, inclusive (the “ClassPeriod”). Plaintiffs pursue claims against the Defendants under the Securities Exchange Act of1934 (the “Exchange Act”).

Filing Date
03/22/2021
Class Period
11/11/2020 to 03/03/2021
Transgression
Securities Violation
Filing Firms
Glancy Prongay & Murray LLP
Case Title
Zawatsky v. Vroom, Inc.
Docket Number
1:21-cv-02477
Court
New York Southern District Court
Free File
Complaint

Allegations

According to the complaint, defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects. Specifically, defendants allegedly failed to disclose to investors:

(1) 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;
(2) that, as a result, the Company was forced to discount aged inventory to move through its retail channels or liquidated in its wholesale channels;
(3) that, as a result, the ecommerce gross profit per unit was reasonably likely to decline;
(4) 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.

Defendants

Company
Vroom, Inc.
Chief Executive Officer
Paul J. Hennessy
Chief Financial Officer
David K. Jones

Lawsuit progression

Docket Number
1:21-cv-02477
Court
New York Southern District Court

Lead Counsel

08/05/2021

The court issued an order appointing the lead plaintiff and lead counsel.

Lead Counsel
Barrack, Rodos & Bacine
Lead Plaintiff
Fund
Free File
Order for lead

Amended Complaint

10/04/2021

Lead Plaintiff . . . brings this action for violations of the federal securities laws on behalf of itself and all other similarly situated persons or entities who: (1) purchased or otherwise acquired the common stock of Vroom, Inc. between June 9, 2020 and March 3, 2021, both dates inclusive; and/or (2) acquired shares of the common stock of Vroom in connection with Vroom’s September 2020 follow-on stock offering, in which the Company sold 10.8 million shares of its common stock at $54.50 per share for nearly $590 million in gross offering proceeds, and were injured thereby.