San Diego, California--(Newsfile Corp. - September 7, 2021) - Robbins Geller Rudman & Dowd LLP filed a class action lawsuit charging HyreCar Inc. (NASDAQ: HYRE) and certain of its executives with violations of the Securities Exchange Act of 1934 and seeking to represent purchasers or acquirers of HyreCar securities between May 14, 2021 and August 10, 2021, inclusive (the "Class Period"). The HyreCar class action lawsuit - Baron v. HyreCar Inc., No. 21-cv-06918 - was commenced on August 27, 2021 in the Central District of California.
If you wish to serve as lead plaintiff of the HyreCar class action lawsuit, please provide your information by clicking here. You can also contact attorney J.C. Sanchez of Robbins Geller by calling 800/449-4900 or via e-mail at jsanchez@rgrdlaw.com. Lead plaintiff motions for the HyreCar class action lawsuit must be filed with the court no later than October 26, 2021.
The plaintiff is represented by Robbins Geller, which has extensive experience in prosecuting investor class actions including actions involving financial fraud. You can view a copy of the complaint by clicking here.
CASE ALLEGATIONS: The HyreCar class action lawsuit alleges that, throughout the Class Period, defendants made false and misleading statements and failed to disclose that: (i) HyreCar had materially understated its insurance reserves; (ii) HyreCar had systematically failed to pay valid insurance claims incurred prior to the Class Period; (iii) HyreCar had incurred significant expenses transitioning to its new third-party insurance claims administrator and processing claims incurred from prior periods; (iv) HyreCar had failed to appropriately price risk in its insurance products and was experiencing elevated claims incidence as a result; (v) HyreCar had been forced to dramatically reform its claims underwriting, policies, and procedures in response to unacceptably high claims severity and customer complaints; and (vi) as a result, HyreCar's operations and prospects were misrepresented because HyreCar was not on track to meet the financial estimates provided to investors during the Class Period, and such estimates lacked a reasonable basis in fact, including HyreCar's purported gross margin, earnings before interest, taxes, depreciation, and amortization ("EBITDA"), and net loss trajectories.
On August 10, 2021, HyreCar announced deeply disappointing results for the quarterly period ended June 30, 2021 ("Q2 2021"), including net losses of $9.3 million compared to losses of $3.8 million in the same period the prior year. Furthermore, HyreCar's adjusted EBITDA loss for Q2 2021 was $7.1 million (four times higher than the $1.7 million adjusted EBITDA loss experienced in the second quarter of 2020) and its gross profit for Q2 2021 was just $0.8 million (less than one third HyreCar's gross profit in the second quarter of 2020), with a gross profit margin of just 24%. Contemporaneously with the release, HyreCar disclosed that HyreCar had incurred skyrocketing costs of revenue during the quarter primarily as a result of significantly higher insurance claims incidence - including claims before March 31, 2021 "in excess of the reserves." During HyreCar's earnings call, executives revealed that HyreCar had been forced to revamp its claims processes and procedures and improve its risk price adjustments for policies issued by HyreCar. And when asked whether HyreCar was actually on track to achieve 45% to 50% gross margins in the near term as previously represented, HyreCar's CFO essentially withdrew this goal, calling it a "shoot for the sky" aim and stating that "shooting for margin upwards of 40%" was more realistic. On this news, the price of HyreCar stock fell nearly 50%, damaging investors.