What Happened?

Shares of online new and used car marketplace Cars.com (NYSE:CARS) fell 20.3% in the afternoon session after 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​.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Cars.com? Access our full analysis report here, it’s free.

What The Market Is Telling Us

Cars.com’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 Cars.com and indicate this news significantly impacted the market’s perception of the business.

Cars.com is down 27.7% since the beginning of the year, and at $12.18 per share, it is trading 41.2% below its 52-week high of $20.71 from June 2024. Investors who bought $1,000 worth of Cars.com’s shares 5 years ago would now be looking at an investment worth $1,482.

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