What Happened?

A number of stocks jumped in the morning session after markets continued to rally as the latest inflation data reinforced expectations for a Federal Reserve rate cut as soon as September. The latest Consumer Price Index (CPI) report for July showed inflation holding steady, reinforcing market expectations that the Federal Reserve could begin cutting interest rates as soon as September. Lower interest rates generally stimulate the economy by making borrowing cheaper for consumers and businesses. This can lead to increased consumer spending and e-commerce activity, which directly benefits online retail and marketplace companies. The positive economic outlook fueled a broad-based rally, pushing the S&P 500 and Nasdaq to new record highs and lifting most growth-oriented technology stocks.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Online Marketplace company Sea (NYSE: SE) jumped 3.2%. Is now the time to buy Sea? Access our full analysis report here, it’s free.
• Online Marketplace company Etsy (NASDAQ: ETSY) jumped 4.8%. Is now the time to buy Etsy? Access our full analysis report here, it’s free.
• Consumer Subscription company Match Group (NASDAQ: MTCH) jumped 5.7%. Is now the time to buy Match Group? Access our full analysis report here, it’s free.
• Online Marketplace company CarGurus (NASDAQ: CARG) jumped 5.8%. Is now the time to buy CarGurus? Access our full analysis report here, it’s free.
• Gig Economy company Fiverr (NYSE: FVRR) jumped 3.6%. Is now the time to buy Fiverr? Access our full analysis report here, it’s free.

Zooming In On CarGurus (CARG)

CarGurus’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 6 months ago when the stock dropped 19.4% on the news that the company had a rough Q4 2024, with revenue and next-quarter guidance falling short of expectations. Sales grew just 2% compared to the previous year, dragged down by a 55% decline in both Wholesale and Product revenue, while Marketplace revenue, the core business, expanded 15%. International sales were a bright spot, climbing 26%. Despite sluggish revenue growth, gross profit climbed 18% as margins improved. Adjusted EBITDA also surged, outpacing revenue growth and lifting EPS above Wall Street's estimates. First-quarter EBITDA guidance also topped forecasts, pointing to stronger profitability ahead. Still, first-quarter revenue projections signal ongoing softness, with Wholesale and Product segments likely remaining a drag. Investors will watch whether Marketplace momentum can offset these headwinds. Overall, this was a softer quarter due to weaker top-line momentum.

CarGurus is down 10.2% since the beginning of the year, and at $32.10 per share, it is trading 20.8% below its 52-week high of $40.55 from January 2025. Investors who bought $1,000 worth of CarGurus’s shares 5 years ago would now be looking at an investment worth $1,143.

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