- Company Name
- TrueCar, Inc.
- Stock Symbol
- Class Period
- February 16, 2017 to November 6, 2017
- Motion Deadline
- June 1, 2018
The complaint charges TrueCar and its chief financial officer with violations of the Securities Exchange Act of 1934. TrueCar develops and publishes an online automobile information and communication platform. TrueCar operates a company-branded platform that can be accessed directly and also customizes and operates its platform on a co-branded basis for many affinity group marketing partners, including financial institutions, such as the United Services Automobile Association (“USAA”), membership-based organizations and employee buying programs for large enterprises.
The complaint alleges that during the Class Period, defendants made false and misleading statements and/or concealed adverse information regarding the Company’s business, operations and financial results, including that, despite TrueCar’s positive statements regarding its strong growth prospects and its relationship with USAA, the Company’s largest source of user traffic and unit sales, USAA had been planning and had made significant changes to its website that would have a material adverse effect on the volume of purchases generated by USAA. As a result of defendants’ false statements and/or failure to disclose these adverse facts, TrueCar securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of more than $21 per share.
On November 6, 2017, TrueCar announced disappointing third quarter 2017 financial results, disclosing that USAA had made significant changes to its website during the Class Period that had a material adverse effect on the volume of purchases generated by USAA. In a conference call to discuss the Company’s results the same day, defendants stated that “USAA ha[d] made the changes as a result of their desire to provide more financial advice to their members when they’re making a big purchase like a car.” The changes “involved inserting some steps, questions and also content related to vehicle affordability and cost of ownership. So we saw this coming. It wasn’t like we were blind to the[ changes].” And even though TrueCar and USAA were “working on site optimization,” TrueCar had seen a “decline in traffic, prospects and units on USAA.” On this news, TrueCar's shares declined $5.76 per share, or over 35%, to close at $10.58 per share on November 7, 2017.