deepblue4you/E+ via Getty Images On a down day for internet retail stocks, online auto retailers are performing particularly poorly.
Carvana (NYSE: CVNA -15.0%) is leading the way down as a focus on profitability metrics combined with concerns on its recent dealings with Apollo Global ( APO ) draw the market’s ire. Shares fell nearly 20% at the lows of the day, extending losses that leave the stock down nearly 80% since the start of the year.
“By the company’s own admission, it had accelerated growth at precisely the wrong time into a consumer slowdown leaving a major mismatch between capacity and demand, creating a liquidity crunch,” Morgan Stanley analyst Adam Jonas wrote in a note covering Carvana ( CVNA ) on Wednesday.
However, Carvana ( CVNA ) is not alone in being battered among online auto retail stocks on Thursday despite its idiosyncratic issues. Rather, the broader industry sell-off appears driven by concerns on inflation and consumer strength that Jonas alluded to. In Thursday’s trading, Carmax ( KMX -6.6%), Cars.com ( CARS -6.0%), Shift Technologies ( SFT -7.5%), Vroom, Inc. ( VRM -9.1%), and CarLotz ( LOTZ -7.0%) all either hit or near 52-week lows.
Indeed, the negativity is such that even a largely positive earnings result from Cars.com ( CARS ) that beat estimates to reach a $0.06 GAAP profit could not generate any bounce. Instead, shares fell by nearly double-digits at their intraday nadir as management commentary on the adverse impact of “the macro-economic environment including industry-wide inventory shortages” carried the day’s stock trend.
Inflation is, of course, top of mind for each of these names with used autos being a leader in terms of inflationary components. Per Cox Automotive, used vehicle sales fell about 15-20% from 2021 in the first quarter due to inflationary pressures. Essentially, a significant number of consumers […]
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