CarMax tumbles after earnings report 📉

Shares of the largest used car dealer in the US, CarMax (KMX.US) came under supply-side pressure today amid weak financial results for the fiscal quarter ended November 30, 2022:

Earnings per share: $0.24 vs. $0.70 expected and $1.63 in 2021

Net income: $37.6 million vs. $264.9 million in Q4 2021

Revenue: $6.51 billion vs. $7.16 billion forecast

Used car sales fell 22.9% y/y vs. 16.9% decline according to FactSet

Average sales rose 1.9% to $28,530.

U.S. consumers are tipping on high car prices, especially in the electric car market. According to Cars.com, the average price of used Rivian cars is 132% of new models. The premium is possible mainly because of the long waiting time for new models. The average price of Lucid cars was about 92% of the average price of a new model. Carmax also said in a press release that it is beginning to lose it's share in the cars market although it still gained it on an annual basis. The previous quarter's results also fell short of analysts' expectations. The in the media commentary informed that macro factors hitting demand and situation will persist in the next quarter as inflationary pressures and rising interest rates weigh on consumer opportunities and sentiment. CarMax announced the suspension of its share repurchase program deepening the decline in shareholders sentiment.

Carmax (KMX.US) shares, D1 interval. The rebound after the downward gap was stopped at the levels of previous lows, at $55 per share. The stock clearly respects resistance in the form of the 200-session moving average (red line). Source: xStation5