In This Article:
What Happened?
Shares of online new and used car marketplace Cars.com (NYSE:CARS) fell 9.7% in the afternoon session after the company reported weak first quarter 2025 results which included misses on revenue, EPS, and dealer customers, despite an EBITDA beat. Sales dipped 1% to $179 million, as dealer subscription revenue slipped and ARPD softened under economic pressure. Zooming out, we think this was a mixed quarter.
The shares closed the day at $10.05, down 11.2% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Cars.com? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Cars.com’s shares are somewhat volatile and have had 14 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 biggest move we wrote about over the last year was 2 months ago when the stock dropped 20.3% on the news that the company reported weak fourth-quarter results, with full-year revenue guidance slightly missing expectations and next quarter's revenue guidance falling short of Wall Street's estimates. Revenue for the quarter was essentially flat year-on-year, reflecting a decline in dealer subscription sales. Despite the revenue slowdown, Cars.com narrowly exceeded analysts' EBITDA expectations, indicating a better handle on profits. Overall, this was a weaker quarter, with revenue growth stagnating even as cost controls helped sustain profits.
Cars.com is down 40.3% since the beginning of the year, and at $10.05 per share, it is trading 51.5% below its 52-week high of $20.71 from June 2024. Investors who bought $1,000 worth of Cars.com’s shares 5 years ago would now be looking at an investment worth $1,664.
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