CarMax, Inc. (KMX) Faces Investor Scrutiny After Unexpected $142 Million Loss Provision Sends Shares Tumbling -- Hagens Berman

SAN FRANCISCO, Oct. 2, 2025 /PRNewswire/ -- CarMax, Inc. (NYSE: KMX) shareholders endured a sharp sell-off on September 25, 2025, with the stock plummeting nearly 20% following the release of its second-quarter 2026 financial results. The catalyst for the decline was a surprise surge in the provision for loan losses within the company's CarMax Auto Finance (CAF) segment, its in-house financing arm.

This development and severe market reaction has prompted national shareholders rights firm Hagens Berman to open an investigation into whether CarMax may intentionally have misled investors about the quality of CAF's loan portfolio.

The firm urges investors in CarMax who suffered significant losses to submit your losses now. The firm also encourages persons with knowledge who may be able to assist in the investigation to contact its attorneys.

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CarMax, Inc. (KMX) Investigation:

The investigation is focused on the propriety of CarMax's disclosures about the quality of CAF's loan portfolio, which consists of older vintage loans and new originations.

CAF, one of CarMax's two reportable business segments, holds a portfolio of auto loans as investments, for which it maintains an allowance for loan losses to cover expected net credit losses over the contractual life of the assets.

The recent provisioning increase appears to be at odds with recent assurances from management. During the company's first-quarter 2025 earnings call on June 20, 2025, CarMax recorded a provision of $101.7 million. When questioned by an analyst on the future cadence of provisioning, management had confidently stated that Q1 would likely be the "high watermark" for the year, adding that adjustments had been made on "older vintages" and that they "feel good about [the] reserve."

Provisioning Reversal

These assurances were sharply tested with the Q2 2026 report. CarMax's financial results broadly missed analysts' consensus estimates for GAAP EPS and revenue, driven in significant part by a $142 million loan loss provision. This figure represents a sequential increase of nearly 40% and a year-over-year jump of approximately 24%.

According to the company's CFO, the elevated provisioning—which was split evenly between old vintage and newly originated loans—was necessitated by deteriorating credit trends. Management admitted during the subsequent earnings call that they "saw some of those customers coming back into delinquency and loss during Q1," suggesting the credit deterioration was already emerging before their previous quarter's commentary.

The news sent CarMax shares falling by $11.45 on the day, a decline of roughly 20%.

"We're focused on investors' losses and whether CarMax may have misled investors about the quality of the CAF portfolio," said Reed Kathrein, the Hagens Berman partner leading the firm's investigation.

If you invested in CarMax and have substantial losses, or have knowledge that may assist the firm's investigation, submit your losses now »

If you'd like more information and answers to frequently asked questions about the CarMax investigation, read more »

Whistleblowers: Persons with non-public information regarding CarMax should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the new program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, call Reed Kathrein at 844-916-0895 or email [email protected].

About Hagens Berman
Hagens Berman is a global plaintiffs' rights complex litigation firm focusing on corporate accountability. The firm is home to a robust practice and represents investors as well as whistleblowers, workers, consumers and others in cases achieving real results for those harmed by corporate negligence and other wrongdoings. Hagens Berman's team has secured more than $2.9 billion in this area of law. More about the firm and its successes can be found at hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw. 

SOURCE Hagens Berman Sobol Shapiro LLP