What Happened?
Shares of used automotive vehicle retailer Carmax (NYSE: KMX) fell 23.4% in the morning session after the company reported third-quarter 2025 results that significantly missed Wall Street's expectations. The company posted earnings of $0.64 per share, which fell far short of the anticipated $1.03 per share and marked a 24.7% drop from the previous year. Revenue also disappointed, coming in at $6.59 billion, below the consensus estimate of $7.07 billion and representing a 6% decrease year-over-year. The poor performance was driven by weakening demand, as same-store sales fell 7.1%. Adding to concerns, profitability worsened, with the operating margin declining to 1.8% from 2.9% in the same quarter last year.
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What Is The Market Telling Us
CarMax’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. Moves this big are rare for CarMax and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock dropped 19.8% on the news that the company reported underwhelming Q1 2025 (fiscal Q4 2025) results.
Its EBITDA missed significantly and its EPS fell short of Wall Street's estimates. More troubling, the company suspended its long-term growth guidance, citing macroeconomic uncertainty, a move that signaled management's reduced visibility and confidence in the future growth trajectory. Overall, this quarter could have been better.
CarMax is down 44.1% since the beginning of the year, and at $45.42 per share, it is trading 49.1% 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 $483.04.
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