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HomeMarketCarMax stock plunges, as ‘vehicle affordability challenges’ lead to big earnings miss

CarMax stock plunges, as ‘vehicle affordability challenges’ lead to big earnings miss

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Shares of CarMax Inc.
KMX,
+2.79%
took an 11.9% dive in premarket trading Thursday, after the used vehicle seller reported fiscal third-quarter profit and sales that dropped well below expectations, as inflation and rising interest rates led to “vehicle affordability challenges.” Net income for the quarter to Nov. 30 fell to $37.6 million, or 24 cents a share, from $269.4 million, or $1.63 a share, in the year-ago period, to miss the FactSet consensus for earnings per share of 65 cents. Sales declined 23.7% to $6.51 billion, below the FactSet consensus of $7.16 billion, as used unit sales in comparable stores tumbled 22.4% to miss expectations of a 17.4% decline. Average selling prices rose 1.9% to $28,530. “We believe vehicle affordability challenges continued to impact our third quarter unit sales performance, as headwinds remain due to widespread inflationary pressures, climbing interest rates, and low consumer confidence,” the company said in a statement. The stock, which was on track to open at the lowest price seen since April 2020, has tumbled 25.6% over the past three months through Wednesday, while the S&P 500
SPX,
+1.49%
has gained 3.2%.

Credit: marketwatch.com

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