What Happened?
Shares of online used car auction platform ACV Auctions (NASDAQ: ACVA) jumped 10.4% in the morning session after a director, Robert P. Goodman, disclosed a significant purchase of company shares worth over $5.1 million. According to filings with the SEC, Goodman acquired 912,408 shares of common stock at a weighted average price of $5.61. This large purchase by a high-level insider was seen by investors as a strong signal of confidence in the company's future direction. Such transactions often suggest that leadership believes the stock is undervalued or that positive developments are on the horizon, which can encourage other investors to buy shares.
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What Is The Market Telling Us
ACV Auctions’s shares are very volatile and have had 22 moves greater than 5% over the last year. But moves this big are rare even for ACV Auctions and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 7 days ago when the stock dropped 35% on the news that it reported disappointing third-quarter results and provided a weak financial outlook. The company posted a GAAP loss of $0.14 per share, double the $0.07 loss that analysts had expected. While third-quarter revenue of $199.6 million met Wall Street's expectations, growing 16.5% year-over-year, the company's guidance concerned investors. Management's forecast for the fourth quarter projects revenue of $182 million, which is nearly 5% below consensus estimates. Furthermore, the company's full-year EBITDA guidance of $57 million also fell significantly short of the $68.56 million that analysts had anticipated. The combination of the earnings miss and a weaker-than-expected forecast triggered the sharp sell-off.
ACV Auctions is down 70.8% since the beginning of the year, and at $6.12 per share, it is trading 73.6% below its 52-week high of $23.17 from December 2024. Investors who bought $1,000 worth of ACV Auctions’s shares at the IPO in March 2021 would now be looking at an investment worth $195.68.
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