What Happened?
Shares of used automotive vehicle retailer Carmax (NYSE:KMX) jumped 4.4% in the afternoon session after the company launched a nationwide at-home pickup service for customers looking to sell their vehicles and introduced a new tool to track car values.
The used-car retailer's new service, available to a majority of its customers, enabled them to sell a car from their home or office. CarMax also rolled out "Offer Watch," a free tool that provided monthly updates on a car's value based on market conditions, helping owners choose the right time to sell. According to the company, customers could get an online offer in about two minutes that was valid for seven days. These offerings were designed to enhance the company's appraisal experience and make the selling process more convenient.
After the initial pop the shares cooled down to $33.32, up 3.8% from previous close.
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What Is The Market Telling Us
CarMax’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock gained 2.8% on the news that the stock attempted a slight recovery after a major sell-off prompted by the sudden termination of its CEO and a dire preliminary financial report.
The steep drop in the stock's price followed the company's announcement that CEO Bill Nash had been fired. CarMax also issued a disappointing preliminary outlook for its third quarter, forecasting a decrease in comparable store sales of 8% to 12%. In addition, the company projected earnings per share in a range of only $0.18 to $0.36, which was significantly below analysts' expectations of $0.69. Compounding the company's troubles, Morgan Stanley downgraded the stock from "Overweight" to "Equal-weight" and slashed its price target, pointing to execution problems and uncertainty around new leadership.
CarMax is down 59% since the beginning of the year, and at $33.32 per share, it is trading 62.6% below its 52-week high of $89.19 from February 2025. Investors who bought $1,000 worth of CarMax’s shares 5 years ago would now be looking at an investment worth $358.91.
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