What Happened?
Shares of online auto marketplace CarGurus (NASDAQ: CARG) jumped 15.2% in the morning session after the company reported impressive third-quarter earnings that blew past analysts' revenue and EBITDA expectations. The improvement in sales was driven by a 15% year-on-year growth in marketplace revenue, showcasing the company's successful focus on customer engagement and dealer retention.
On the profitability front, CarGurus achieved a 33% year-on-year increase in adjusted EBITDA, reflecting the company's improved cost management. Overall, this quarter had some key positives. After the initial pop the shares cooled down to $34.93, up 4.6% from previous close.
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What The Market Is Telling Us
CarGurus’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. Moves this big are rare for CarGurus and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 19.6% on the news that the company reported impressive second quarter earnings results. CarGurus narrowly topped analysts' revenue and adjusted EBITDA expectations. The quarter also benefited from the strong performance of the marketplace business, which recorded "the largest quarterly revenue increase since 2021", due to more demand for add-on products and the growing shift to premium subscription tiers. Looking ahead, next quarter's revenue guidance came in higher than Wall Street's estimates. Overall, this was a solid quarter for CarGurus.
CarGurus is up 48.4% since the beginning of the year, and at $34.93 per share, has set a new 52-week high. Investors who bought $1,000 worth of CarGurus’s shares 5 years ago would now be looking at an investment worth $924.07.
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