Why Cars.com and KAR Auction Dropped by Double Digits While Carvana Popped 10%
Shares of Cars.com (NYSE: CARS), KAR Auction Services (NYSE: KAR), and Carvana (NYSE: CVNA), are trading all over the map Thursday as Cars.com and KAR Auction are down 18% and 11%, respectively, while Carvana is up 10% on a wealth of earnings reports and a sign of optimism from Lyft (NASDAQ: LYFT).
Let's point out something that investors need to keep in mind currently: There is simply a lot of market volatility amid the coronavirus pandemic. Just yesterday Cars.com soared 34% after it handily beat analysts' estimates during its first quarter, only to give a chunk of those gains back today as investors may have realized that despite a great quarter we are far from the end of COVID-19's financial impact. Management told investors effects of the COVID-19 pandemic will have negative impacts on operations, cash flow, and its financial position, and the second quarter is almost certainly going to be worse than the first quarter.
KAR Auction's stock declining probably shouldn't come as a shock, as auction services have slowed significantly amid COVID-19 and used car prices have plunged as off-lease vehicles stack up. The first-quarter financial impacts, even with most of the first quarter being free of COVID-19 restrictions, were noticeable: Revenue declined 6% compared to the prior year, and net income from continuing operations dropped 82%. Management noted there was serious disruption to its business in the second half of March 2020, and that it halted its physical auctions, has withdrawn financial guidance for 2020, and suspended its dividend.
Source Fool.com
