CARG - CarGurus stock crashes on earnings miss weak forecast

CarGurus ( NASDAQ: CARG ) stock slumped nearly 25% lower after both earnings and guidance lagged behind analyst expectations on Tuesday.

The company posted a miss on top and bottom lines in the third quarter as the company’s gross margin contracted to 35% from 73% in the year prior. Analysts had expected the company to post a 39.5% margin. Meanwhile, total paying dealers of 31,286 narrowly missed the consensus expectation of 31,300.

“Regarding our most recent quarter, while there were business areas that exceeded our expectations, our third quarter financial metrics fell short of the low end of our guidance range,” CEO Jason Trevisan admitted. “The hurdles faced this quarter represent an opportunity to move quickly to make the transformations necessary to achieve these long-term goals, and while that will require some time and focus to realize, I believe our team can accomplish all that we have set out to achieve and that our portfolio strategy is the right one.”

For the fourth quarter, management expects earnings per share to range from $0.13 to $0.16, well below the $0.27 expectation. Meanwhile, a revenue guide of $270M to $300M was also well below the $468.42M consensus. As such, the full-year forecasts also fell short of consensus, with a forecast of $1.02 to $1.05 in EPS short of the $1.23 consensus estimate and a sales forecast of $1.64B to $1.67B also short of the $1.87 consensus.

Shares of the Cambridge, Massachusetts-based company cratered 22.97% by 4:45PM ET on Tuesday.

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