NEW YORK, Sep 03, 2021 (GLOBE NEWSWIRE) – Law firm Kirby McInerney LLP announces that a class action lawsuit has been filed in U.S. District Court for the Central District of California on behalf of those who acquired HyreCar Inc . (“HyreCar” or the “Company”) (NASDAQ: HYRE) from May 14, 2021 to August 10, 2021 inclusive (the “Class Period”). Investors have until October 26, 2021 to ask the court to be named lead plaintiffs in the lawsuit.
HyreCar operates an online marketplace that allows car and fleet owners to rent their cars from Uber, Lyft and other economy service drivers. HyreCar operates a platform that connects concert drivers to automobiles, while also providing insurance and tactical support. HyreCar earns revenue from two revenue sharing fees (one from the driver and one from the owner) as well as from the driver’s insurance fees, with the insurance fees being a significant percentage (if not the majority) of the revenue generated by each transaction. .
On May 13, 2021, after the market closed, HyreCar issued a press release stating that the Company achieved “record first quarter 2021 financial results” for the quarter ended March 31, 2021. The press release stated that deposits of HyreCar’s insurance had more than doubled in the quarter to $ 1.7 million, while the amount of HyreCar’s insurance reserve (which shows the amount of claims incurred but not yet paid) had declined more than 17% year-end to $ 1.7 million.
The truth about HyreCar’s insurance revenue was revealed on August 10, 2021. After the market closed, HyreCar issued a press release announcing deeply disappointing results for the quarterly period ended June 30, 2021, including losses net of $ 9.3 million against losses of $ 3.8 million. at the same period the previous year. In addition, HyreCar’s adjusted profit before interest, taxes, depreciation, and amortization (“EBITDA”) for the second quarter of 2021 was $ 7.1 million (four times higher than the loss of adjusted EBITDA of $ 1. $ 7 million recorded in the second quarter of 2020) and its gross profit for the second quarter of 2021 was only $ 0.8 million (less than a third of HyreCar’s gross profit in the second quarter of 2020), with a gross profit margin of only 24%. Following this news, the Company’s share price fell by $ 9.27 per share, or approximately 48.5%, from $ 19.12 per share to close at $ 9.85 per share on the 11th. August 2021.
The lawsuit alleges that throughout the Class Period, the Defendants failed to disclose the following adverse facts, which were known to the Defendants or ignored by them: (1) HyreCar had substantially underestimated its insurance reservations; (2) HyreCar consistently failed to pay valid insurance claims incurred prior to the Class Period; (3) HyreCar had incurred significant expenses to move over to its new insurance claims administrator and process claims from previous periods; (4) HyreCar had not correctly priced the risk in its insurance products and therefore experienced a high incidence of claims; (5) HyreCar had been forced to radically reform its underwriting, policies and complaints procedures in response to unacceptable severity of claims and customer complaints; and (6) as a result of the foregoing, HyreCar’s operations and prospects have been distorted because the company 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 the alleged gross margin, EBITDA and net loss trajectories.
If you have purchased or acquired HyreCar titles, have any information or would like to know more about these claims, please contact Thomas W. Elrod of Kirby McInerney LLP at 212-371-6600, by email at [email protected], or by completing this contact form, to discuss your rights or interests in these matters at no cost to you.
Kirby McInerney LLP is a New York law firm specializing in securities, antitrust, whistleblower and consumer litigation. The firm’s efforts on behalf of shareholders in securities litigation have resulted in recoveries totaling billions of dollars. Additional information about the firm is available on the Kirby McInerney LLP website: http://www.kmllp.com.
This press release may be considered an attorney’s advertisement in certain jurisdictions under applicable law and ethical rules.
Kirby McInerney LLP
Thomas W. Elrod, Esq.