HyreCar Inc. (HYRE) Securities Fraud Class Action:
The complaint alleges that throughout the Class Period, Defendants falsely touted HyreCar’s competitive advantage with its “unique” commercial automobile insurance policy. Defendants also deceptively claimed the company’s insurance program “enables us to keep insurance costs and liability low” and that its insurance reserves were accurate. In addition, Defendants told investors the company tested then enacted “price enhancements,” that they claimed would drive significant net revenue and gross margin improvements through 2021 to achieve the company’s near-term gross margin goal of 45-50%.
In reality, Defendants had (1) materially understated HyreCar’s insurance reserves, (2) systematically did not pay valid insurance claims incurred before the Class Period, (3) incurred significant expenses transitioning to its new third-party insurance claims administrator, and (4) did not appropriately price risk in its insurance products and, as a result, experienced elevated claims.
The truth emerged on Aug. 10, 2021, when HyreCar reported deeply disappointing Q2 2021 net losses of $9.3mm compared to net losses of $3.8mm in the prior year period and a gross profit margin of just 24%, nowhere near the 45-50% near-term goal. The company blamed these results on additional insurance claims of $2.8mm and incidental payments incurred before March 31, 2021 in excess of the reserves and accruals. The new CFO called the 45-50% margin goal a “shoot for the sky” and sharply trimmed it.
On this news, the price of HyreCar stock fell nearly 50% in a single day to close at $9.85 per share on Aug. 11, 2021, on abnormally high volume.
“We’re focused on investors’ losses and proving HyreCar misrepresented the adequacy of its insurance reserves,” said Reed Kathrein, the Hagens Berman partner leading the investigation.
If you invested in HyreCar and have significant losses, or have knowledge that may assist the firm’s investigation, click here to discuss your legal rights with Hagens Berman.
Whistleblowers: Persons with non-public information regarding HyreCar 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 mailto:[email protected].
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Reed Kathrein, 844-916-0895
SOURCE Hagens Berman Sobol Shapiro LLP