LPRO Lawsuit Alert! Class Action Against Open Lending Corporation

A class action lawsuit was filed against Open Lending Corp. (LPRO) by Levi & Korsinsky on May 1, 2025. The plaintiffs (shareholders) alleged that they bought LPRO stock at artificially inflated prices between February 24, 2022 and March 31, 2025 (Class Period) and are now seeking compensation for their financial losses. Investors who bought Open Lending stock during that period can click here to learn about joining the lawsuit.

Open Lending operates through its cloud-based automated lending platform, Lenders Protection, offering loan analytics, risk-based pricing, risk modelling, and default insurance. The platform ensures that financial institutions across the U.S. have access to profitable auto loan portfolios.

The company’s claims about the efficiency of its risk-based pricing models, profit-share revenue forecasts, and quality of vintage loans are at the heart of the current complaint.

Open Lending’s Misleading Claims

According to the lawsuit, Open Lending and three of its former senior officers (the Defendants) repeatedly made false and misleading public statements throughout the Class Period. Particularly, they are accused of omitting truthful information about the company’s risk-based pricing models, its profit share revenue, and its 2021 and 2022 vintage loans from SEC filings and related material.

During the Class Period, the company reported a 98% increase in total revenues for fiscal year ending December 31, 2021. Open Lending attributed this growth to an increase in anticipated profit share, program fees, and claims administration and other service fee revenues on new loan originations, as well as changes in estimated future revenues from historical vintages.

Additionally, the company described its method for forecasting profit share revenue, which is based on multiple parameters, including forecasts of loan-level earned premiums and insurance claim payments. Other factors, such as projections of loan defaults, prepayments, and severity rates, also influence the profit share revenue.

Finally, in a quarterly report filed on November 8, 2023, the company recorded a $1.7 million increase in profit share revenue associated with historic vintages, mainly due to lower-than-anticipated severity of losses.

Subsequent events (discussed below) revealed that Open Lending had failed to inform investors about the limited capabilities of its risk-based pricing models and the deteriorating quality of its vintage loans, which ultimately impacted its revenues.

Plaintiffs’ Arguments

The plaintiffs maintain that the defendants deceived investors by lying and withholding critical information about the business practices and prospects during the Class Period. Importantly, the defendants are accused of misleading investors about the effectiveness of the company’s methods for determining profit share revenue and other key metrics.

The information became clear after the market closed on March 31, 2025, when Open Lending reported its Q4 and full year fiscal 2024 results. Unfortunately, the company reported a negative quarterly revenue of $56.9 million, owing to “a $81.3 million reduction in estimated profit share revenues related to business in historic vintages.” These were, in turn, affected by increased delinquencies and related defaults associated with loans originated between 2021 and 2024. Following the news, LPRO stock plunged 57.6% the next day.

To conclude, the company’s inadequate risk-based pricing models and related projections of profit share revenues led to disappointing financial performance. As a result, LPRO stock declined 70.4% so far this year, causing massive damage to shareholder returns.