CarMax Stock Plunges 20% on Surprise Loan Loss Surge
CarMax, Inc. (NYSE: KMX) shares plummeted by $11.45 on September 25, 2025, marking a 20% decline, following the release of its second-quarter financial results. The significant sell-off was triggered by a surprise surge in the provision for loan losses within its in-house financing arm, CarMax Auto Finance (CAF).
The increase in loan loss provisions was evenly distributed between old vintage and newly originated loans, suggesting a deterioration in credit trends across both categories. This contradicts CarMax's previous statement that the first quarter would likely be the peak for such provisions. The second quarter saw a sequential increase of nearly 40% and a year-over-year jump of approximately 24%, reaching $142 million.
Following the disappointing results, national shareholder rights firm Hagens Berman has launched an investigation. Led by board partner Steve Berman, the probe aims to determine if CarMax intentionally misled investors about the quality of CAF's loan portfolio.
CarMax's stock experienced a sharp sell-off, dropping nearly 20% after the release of its second-quarter financial results. The significant increase in loan loss provisions, evenly distributed between vintage and newly originated loans, has raised concerns about deteriorating credit trends. Hagens Berman has initiated an investigation to assess whether CarMax may have misled investors about the quality of its loan portfolio.
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