Online Marketplace Stocks Q3 In Review: CarGurus (NASDAQ:CARG) Vs Peers

November 21, 2024 at 04:08 AM EST

CARG Cover Image

Looking back on online marketplace stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including CarGurus (NASDAQ: CARG) and its peers.

Marketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission-paying sellers, generating flywheel scale effects that feed back into further customer acquisition.

The 16 online marketplace stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 1.8% while next quarter’s revenue guidance was 1% above.

Luckily, online marketplace stocks have performed well with share prices up 13.4% on average since the latest earnings results.

CarGurus (NASDAQ: CARG)

Bringing transparency to a sometimes opaque process, CarGurus (NASDAQ: CARG) is a digital marketplace where auto dealers can connect with potential customers and where car buyers can browse, purchase, and obtain financing.

CarGurus reported revenues of $231.4 million, up 5.4% year on year. This print exceeded analysts’ expectations by 3.5%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ EBITDA estimates and revenue guidance for next quarter topping analysts’ expectations.

"We are proud of our third quarter results as our Marketplace revenue growth further accelerated, and we leveraged our cost base to drive operating efficiencies," said Jason Trevisan, Chief Executive Officer at CarGurus.

Interestingly, the stock is up 3.4% since reporting and currently trades at $34.53.

Is now the time to buy CarGurus? Access our full analysis of the earnings results here, it’s free.

Best Q3: EverQuote (NASDAQ: EVER)

Aiming to simplify a once complicated process, EverQuote (NASDAQ: EVER) is an online insurance marketplace where consumers can compare and purchase various types of insurance from different providers

EverQuote reported revenues of $144.5 million, up 163% year on year, outperforming analysts’ expectations by 3%. The business had a stunning quarter with EBITDA guidance for next quarter exceeding analysts’ expectations and an impressive beat of analysts’ EBITDA estimates.

EverQuote delivered the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 11.3% since reporting. It currently trades at $19.28.

Is now the time to buy EverQuote? Access our full analysis of the earnings results here, it’s free.

Weakest Q3: Robinhood (NASDAQ: HOOD)

With a mission to democratize finance, Robinhood (NASDAQ: HOOD) is an online consumer finance platform known for its commission-free stock and crypto trading.

Robinhood reported revenues of $637 million, up 36.4% year on year, falling short of analysts’ expectations by 3.2%. It was a softer quarter as it posted a miss of analysts’ EBITDA estimates.

Interestingly, the stock is up 31.7% since the results and currently trades at $37.17.

Read our full analysis of Robinhood’s results here.

LegalZoom (NASDAQ: LZ)

Founded by famous lawyer Robert Shapiro, LegalZoom (NASDAQ: LZ) offers online legal services and documentation assistance for individuals and businesses.

LegalZoom reported revenues of $168.6 million, flat year on year. This number surpassed analysts’ expectations by 0.5%. Aside from that, it was a satisfactory quarter as it also recorded a solid beat of analysts’ EBITDA estimates.

The company reported 1.72 million users, up 9.5% year on year. The stock is down 6.2% since reporting and currently trades at $7.63.

Read our full, actionable report on LegalZoom here, it’s free.

Sea (NYSE: SE)

Founded in 2009 and a publicly traded company since 2017, Sea (NYSE: SE) started as a gaming platform and has since expanded to offer a variety of services such as e-commerce, digital payments, and financial services across Southeast Asia.

Sea reported revenues of $4.33 billion, up 30.8% year on year. This number beat analysts’ expectations by 6%. Overall, it was a strong quarter as it also recorded an impressive growth in its users.

The company reported 50.2 million users, up 24% year on year. The stock is up 17.5% since reporting and currently trades at $114.49.

Read our full, actionable report on Sea here, it’s free.

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), has fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty heading into 2025.

Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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