CarMax Stock Tumbles After Disappointing Q2 Earnings Report

KMX hits a speed bump as quarterly performance misses the mark.

Earnings Breakdown

CarMax's second-quarter results fell short of analyst expectations, triggering an immediate sell-off. The used-car retailer's stock dropped sharply following the earnings release as investors digested the underwhelming numbers.

Market Reaction

Traders quickly punished the stock after the earnings reveal. The decline reflects growing concerns about consumer spending patterns and inventory challenges facing the automotive sector.

Industry Context

The automotive retail space faces headwinds from fluctuating demand and supply chain complexities. CarMax's performance signals broader challenges in the used vehicle market.

Another quarter, another reminder that traditional auto stocks move like sedans while crypto assets accelerate like hypercars—both can crash, but only one has moon potential.

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CarMax reported revenue of $6.59 billion during the quarter, which was another miss compared to analysts’ estimate of $7.01 billion. The company’s revenue also decreased 5.99% year-over-year from $7.01 billion. This was due to a 4.1% drop in combined retail and wholesale used vehicle unit sales, including a 5.4% fall in retail used vehicle unit sales and a 2.2% slide in wholesale vehicle unit sales.

CarMax stock was down 9.33% in pre-market trading on Thursday, following a 0.95% drop yesterday. The shares have also fallen 30.22% year-to-date and 27.06% over the past 12 months.

CarMax Guidance

CarMax didn’t include formal guidance in its latest earnings report. However, President and CEO Bill Nash did discuss the company’s future. He stated, “While this was a challenging quarter, we remain confident in our long-term strategy and the strength of the earnings model that we have built.” Nash also pointed out the company’s SG&A efficiency, with a planned minimal “$150 million in incremental SG&A reductions over the next 18 months.”

Is CarMax Stock a Buy, Sell, or Hold?

Turning to Wall Street, the analysts’ consensus rating for CarMax is Moderate Buy, based on six Buy, two Hold, and a single Sell rating over the past three months. With that comes an average KMX stock price target of $74.88, representing a potential 31.25% upside for the shares. These ratings and price targets will likely change after analysts update their coverage following today’s earnings report.