What Happened?
Shares of online new and used car marketplace Cars.com (NYSE: CARS) fell 15.2% in the afternoon session after the company reported disappointing fourth-quarter results that missed Wall Street's profit expectations.
While the company's revenue of $183.9 million met forecasts, growing 1.9% year-over-year, its adjusted profit of $0.44 per share came in 19.7% below consensus estimates. Furthermore, the company's adjusted EBITDA, a key measure of profitability, also fell short of expectations at $54.9 million. These misses on key profit metrics overshadowed the in-line revenue performance and prompted a negative reaction from investors, as the overall results were viewed as a weaker quarter for the company.
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What Is The Market Telling Us
Cars.com’s shares are very volatile and have had 21 moves greater than 5% over the last year. But moves this big are rare even for Cars.com and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock dropped 20.3% on the news that the company reported weak fourth-quarter results, with full-year revenue guidance slightly missing expectations and next quarter's revenue guidance falling short of Wall Street's estimates.
Revenue for the quarter was essentially flat year-on-year, reflecting a decline in dealer subscription sales. Despite the revenue slowdown, Cars.com narrowly exceeded analysts' EBITDA expectations, indicating a better handle on profits. Overall, this was a weaker quarter, with revenue growth stagnating even as cost controls helped sustain profits.
Cars.com is down 24.1% since the beginning of the year, and at $9.14 per share, it is trading 40.3% below its 52-week high of $15.30 from February 2025. Investors who bought $1,000 worth of Cars.com’s shares 5 years ago would now be looking at an investment worth $783.20.
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