CarMax Investors Alert: Class Action Lawsuit Filed, January 2 Deadline

Are you a CarMax investor who has experienced financial losses? Recent developments indicate that you may be entitled to compensation. A class action lawsuit has been filed against CarMax, Inc. (NYSE: KMX), alleging violations of federal securities laws. The lawsuit focuses on potentially misleading statements made by CarMax regarding its growth prospects between June 20, 2025, and September 24, 2025. With the January 2, 2026, deadline fast approaching to apply for lead plaintiff status, it’s crucial to understand your rights and options.

What is a Securities Class Action Lawsuit?

A securities class action is a lawsuit brought by investors on behalf of a larger group (the “class”) who have suffered similar financial losses due to alleged securities law violations. These violations often involve false or misleading statements, or omissions of material facts, made by a company that artificially inflates the company’s stock price. When the truth is revealed, the stock price typically drops, causing losses for investors.

Why is CarMax Facing a Lawsuit?

Several law firms have announced investigations and the filing of a class action lawsuit against CarMax based on alleged violations of federal securities laws. The core of the allegations revolves around CarMax’s disclosures regarding its financial performance and growth projections during the class period of June 20, 2025, and September 24, 2025.

Specifically, the lawsuit claims that CarMax executives misled investors by overstating the company’s growth prospects. The company attributed its strong performance in the first quarter of fiscal year 2026 to the strength of its business model and customer experience. However, the lawsuit alleges that this growth was primarily due to consumers accelerating car purchases in anticipation of tariffs. When CarMax reported disappointing financial results for the second quarter of fiscal year 2026 on September 25, 2025, the stock price plummeted, causing significant losses for investors.

The key issues that triggered the lawsuit include:

Decline in Key Performance Indicators: CarMax reported a 5.4% decrease in retail unit sales, a 6.3% decrease in comparable store unit sales, and a 2.2% decrease in wholesale units.
Drop in Net Earnings: The company’s net earnings per diluted share fell to $0.64, a significant decline from $0.85 the previous year.
CarMax Auto Finance (CAF) Concerns: Questions arose regarding the quality of CarMax’s loan portfolio, with CAF reporting an 11.02% year-over-year revenue decline due to a $142 million loan loss provision.
CEO Departure: The unexpected departure of CEO Bill Nash on November 6, 2025, further fueled investor concerns.

What Happened to CarMax’s Stock?

The revelation of CarMax’s disappointing Q2 2026 financial results on September 25, 2025, triggered a sharp decline in the company’s stock price. Shares plummeted by $11.45, or 20%, to close at $45.60 on the same day. The stock price decline hurt investors and is the reason for the class action lawsuit.

Who is Eligible to Participate?

The class action lawsuit aims to represent investors who purchased or acquired CarMax securities between June 20, 2025, and September 24, 2025 (or November 5, 2025, in some amended complaints). If you suffered financial losses as a result of investing in CarMax during this period, you may be eligible to participate in the lawsuit.

What are Your Options?

If you are an eligible investor, you have several options:

Join the Class Action: By doing nothing, you will automatically be included as a member of the “class.” However, you will not have any control over the litigation and will be bound by the outcome, whether it is favorable or unfavorable.
Seek to be a Lead Plaintiff: You can actively participate in the lawsuit by seeking to become a lead plaintiff. A lead plaintiff is a representative party who acts on behalf of the entire class in directing the litigation. To become a lead plaintiff, you must file an application with the court by the January 2, 2026, deadline. The court typically appoints the investor with the largest financial interest in the case as lead plaintiff.
Opt-Out: You can choose to exclude yourself from the class action by “opting out.” This allows you to pursue your own individual lawsuit against CarMax, but you will not be entitled to any recovery from the class action settlement or judgment.

The Importance of the January 2, 2026 Deadline

The January 2, 2026, deadline is critical for two reasons:

Lead Plaintiff Application: If you wish to be considered as a lead plaintiff, you must file your application with the court by this date.
Statute of Limitations: While the class action lawsuit may address the statute of limitations, it’s essential to be aware of the time limits for filing securities fraud claims. Consulting with an attorney promptly will help ensure your rights are protected.

How to Take Action

If you believe you have suffered losses as a result of CarMax’s alleged securities law violations, it is crucial to take action to protect your rights. Here’s what you can do:

Contact a Securities Litigation Attorney: Consult with an experienced securities litigation attorney to discuss your legal options and assess your eligibility to participate in the class action lawsuit.
Gather Documentation: Collect all relevant documents related to your CarMax investments, including brokerage statements, purchase confirmations, and any communications with CarMax or your financial advisor.
Evaluate Your Losses: Work with your attorney to calculate the extent of your financial losses resulting from the alleged fraud.
File a Lead Plaintiff Application (if desired): If you wish to be considered as a lead plaintiff, your attorney can assist you in preparing and filing the necessary application with the court.

Understanding the Role of a Lead Plaintiff

The lead plaintiff plays a vital role in a securities class action lawsuit. They represent the interests of the entire class of investors and work closely with the attorneys to guide the litigation strategy. The lead plaintiff’s responsibilities include:

Overseeing the litigation and making key decisions in consultation with the attorneys.
Providing information and documents relevant to the case.
Attending depositions and potentially testifying at trial.

Securities Class Actions and the PSLRA

The Private Securities Litigation Reform Act of 1995 (“PSLRA”) significantly impacted securities class actions. It aimed to prevent frivolous lawsuits and encourage institutional investors to take a more active role in protecting shareholder interests. The PSLRA introduced several key provisions, including:

Lead Plaintiff Selection: The PSLRA established a process for selecting the lead plaintiff, typically the investor with the largest financial interest in the case.
Heightened Pleading Standards: The PSLRA requires plaintiffs to plead their claims with particularity, meaning they must provide specific details about the alleged fraud.
Safe Harbor for Forward-Looking Statements: The PSLRA provides a “safe harbor” for certain forward-looking statements made by companies, protecting them from liability unless the statements were made with actual knowledge of their falsity.

The Importance of Legal Counsel

Navigating a securities class action lawsuit can be complex and challenging. It is crucial to seek the guidance of experienced legal counsel who can:

Evaluate the merits of your claim.
Explain your legal rights and options.
Represent you in court proceedings.
Negotiate a fair settlement on your behalf.

Don’t Delay: Act Now to Protect Your Investment

If you are a CarMax investor who has suffered financial losses, don’t wait to take action. The January 2, 2026, deadline is fast approaching, and it is essential to understand your rights and options. Contact a securities litigation attorney today to discuss your case and determine the best course of action to protect your investment.