Sharp Drop in Sales Send CarMax Stock Plummeting

It was a "challenging" quarter for the used auto industry, per CEO Bill Nash

Digital Content Manager
Sep 29, 2022 at 9:40 AM
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The shares of CarMax, Inc (NYSE:KMX) are plummeting this morning, last seen down 17.1% at $72.18, following the company's second-quarter earnings report. CarMax reported profits and revenue that missed analysts' estimates, as well as a sharp drop in sales. The auto retailer cited "affordability challenges" it faced late in the quarter, while CEO Bill Nash called the second quarter "challenging" for most of the used car sector as consumers rethink their spending. 

KMX is trading at its lowest level since May 2020, and is set to snap a three-day win streak. Year-to-date, KMX is off more than 34%, with recent rallies rejected by the shares' descending 30-day moving average. 

Amid this lackluster price action, there is downgrade potential looming. Of the 13 in coverage, six rate KMX a "buy" or better. Meanwhile, the 12-month consensus price target of $105.12 is a 21.6% premium to last night's close. 

Options traders have taken a bullish stance. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity sports a 10-day put/call volume ratio of 1.05, which sits higher than 72% of readings from the past year. In other words, these traders are picking up calls at a quicker-than-usual clip. 

 

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