On March 30, 2018, investors sued TrueCar, Inc. (“TrueCar” or the “Company”) in United States District Court, Central District of California. Plaintiffs in the federal securities class action allege that they acquired TrueCar stock at artificially inflated prices between February 16, 2017, and November 6, 2017 (the “Class Period”). They are now seeking compensation for financial losses revealed upon public revelation of the Company’s alleged misconduct during that time. Here’s everything you need to know about the TrueCar class action lawsuit:

Summary of the Allegations

Company Background

According to its website, TrueCar (NASDAQ: TRUE) is a “digital automotive marketplace.” As such, it “shows consumers what others paid for the car they want, so they can recognize a fair price.”

The Company says it has a network consisting of more than 14,000 Certified Dealers and that “more than one third of all new car buyers engage with the TrueCar network during their purchasing process.”

In addition to operating its own website, the Company says it “powers car-buying programs for over 500 companies, including some of the most trusted brands in the world such as USAA, AARP and American Express.”

TrueCar had more than 100 million common shares of common stock outstanding as of February 22, 2018.

Summary of Facts

TrueCar and one of its senior officers now stand accused of deceiving investors by lying about and/or withholding critical information about the Company’s business practices and prospects during the Class Period.

Specifically, they are accused of omitting truthful information about significant developments affecting TrueCar’s largest source of revenue from SEC filings and related material. By knowingly or recklessly doing so, they allegedly caused TrueCar stock to trade at artificially inflated prices during the time in question.

The truth came out on November 6, 2017, when the Company issued a press release in which it revealed that its sales for the third quarter of 2017 failed to meet expectations. In an ensuing conference call held on the same day, the Company attributed the shortfall to “a decline in traffic, prospects and units on USAA,” which had made significant changes to its website.

A closer look…

As alleged in the March 30 complaint, the Company repeatedly made misleading public statements during the Class Period.

For instance, in a press release issued when the Class Period began, the Company discussed its future prospects and growth. In this context, it said in pertinent part: “[The Company] is very confident that we now clearly understand and have our hands placed securely on the practical levers that we believe will enable us to continue to drive double-digit rates of unit and revenue growth for some time.”

During a conference call held the same day, the Company’s chief financial officer, a defendant in the lawsuit, said in pertinent part: “And as I said in the call, we’re 11 years into the partnership and still think there is just quite a bit that we can do together with our partners at USAA, to continue to make car buying better and better for their members.”

At a technology conference held on February 28, 2017, the Company also said in pertinent part: “…And as we really look at where the unit growth comes from next year, we absolutely expect all of our channels to grow and grow nicely, TrueCar-branded, USAA.”

Impact of the Alleged Fraud on TrueCar’s Stock Price and Market Capitalization

The following chart illustrates the stock price during the class period:

Actions You May Take

If you have purchased shares during the Class Period, you may join the class action as a lead plaintiff, remain a passive class member, or opt out of this litigation and pursue individual claims that may not be available to the class as a whole.

NOTE: The deadline to file for lead plaintiff in this class action is June 1, 2018. You must file an application to be appointed lead plaintiff prior to this deadline in order to be considered by the Court. Typically, the plaintiff or plaintiffs with the largest losses are appointed lead plaintiff.

In order to identify your potential exposure to the alleged fraud during the time in question, you may wish to perform an analysis of your transactions in True Car common stock using court approved loss calculation methods.

Recently Filed Cases

Listed below are recently filed securities class action cases being monitored by us, along with the class period and the deadline to file a motion to be appointed as the Lead Plaintiff in the action.  Please contact us if you would like an LK report for any of these cases:

Class Action Tracker

About Us 

Levi & Korsinsky is a leading securities litigation firm with a hard-earned reputation for protecting investors’ rights and recovering losses arising from fraud, mismanagement and corporate abuse.  With thirty attorneys and offices in New York, Connecticut, California and Washington D.C., the firm is able to litigate cases in various jurisdictions in the U.S., England, and in other international jurisdictions.

Levi & Korsinsky provides portfolio monitoring services for high-net worth investors and institutional clients.  Our firm also assists investors in evaluating whether to opt-out of large securities class actions to pursue individual claims.

For additional information about this case or our institutional services, please contact us.