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id: 920, Created by Stan Vick, Scout
Driven Brands (DRVN) Failed Investor Guidance Case
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W.D. North CarolinaCourt
27 Oct 2021Class period Start
01 Aug 2023Class period End
- In August 2023, Driven Brands reported disappointing earnings and cut guidance contrary to early reinsurances to investors.
- $DRVN fell 41%, losing $1.7 billion of shareholder value.
- Big pension fund already filed the initial claim vs. Driven in a court of North Carolina.
On August 2, 2023, Driven Brands (DRVN) reported earnings for Q2 2023 that missed expectations.
- The Company released disappointing results for its Paint, Collision, and Glass and Car Wash business segments.
- Driven also slashed its earnings guidance for 2023.
- It attributed earnings miss and guidance cut to delays in integrating its acquired auto glass businesses and increased exposure to “intensified competitive intrusion” in its Car Wash segment, which negatively impacted consumer demand and margins.
On these disclosures, $DRVN fell 41%+ and lost over $1.7 billion of its market capitalization, seriously damaging shareholders.
On May 8, 2023, Driven announced that CFO Tiffany L. Mason abruptly and inexplicably left the Company, just one day after Driven reported its financial results for Q1 2023 and Mason participated in the relevant earnings call. In the wake of Mason’s abrupt departure, Driven reaffirmed its financial guidance for fiscal 2023.
- Meanwhile, during the last years, Driven repeatedly touted its ability to execute and integrate acquisitions as a “core strength,” and assured investors that it had made “significant progress” integrating the auto glass businesses it had acquired.
- The Company also represented that the large scale of its car wash business served as a “competitive moat” that would preserve Driven’s competitive position.
- While Driven acknowledged some “softness” in customer demand for its car wash business segment, it downplayed that issue and pointed investors to the growth of its car wash subscriptions, which Driven labeled as the “Holy Grail” in the car wash business.
- Driven provided assurances to investors that “nothing whatsoever concerns us” regarding its car wash business.
Considering all the representations, Investors have reasons to suspect that Driven and its Executives were lying and hiding the real state of its car wash business which consequently damaged $DRVN shareholder value. One of the affected investors, a big pension fund, has already filed the initial claim vs. Driven in a court of North Carolina.
Failure to Disclose,
Shock Event Date
02 August 2023
22 December 2023
Lead Plaintiff Deadline
20 February 2024