ACV Auctions Stock Down: Missed Guidance and Market Concerns

ACV Auctions (ACVA) stock experienced a significant decline today, with shares dropping by more than 20%. The company reported its first-quarter earnings after market hours on Wednesday, and investors reacted negatively to the results. The decline in ACV Auctions' stock price can be attributed to several factors that align with the company's recent financial performance and market outlook.

Firstly, ACV Auctions missed its revenue guidance for the fourth quarter of 2024. The company reported revenue of $160 million, which was below the high-end of its guidance range of $165 million to $175 million. This missed guidance may have led investors to question the company's ability to accurately forecast its financial performance.

Secondly, while the company's Adjusted EBITDA of $6 million was an improvement from the previous year, it was still below expectations. The company had guided for Adjusted EBITDA of $7 million to $12 million for the quarter. This shortfall may have contributed to investor concerns about the company's profitability.

Thirdly, ACV Auctions provided guidance for 2025 that was below investor expectations. The company expects revenue growth of 20% to 23% year-over-year, which is lower than the 32% growth experienced in 2024. Additionally, the company expects GAAP net income (loss) of ($62) million to ($52) million and Adjusted EBITDA of $65 million to $75 million, which may have disappointed investors who were hoping for stronger financial performance.

Fourthly, the company noted that the dealer wholesale market is expected to be approximately flat year-over-year in 2025. This lack of growth in the market may have contributed to investor concerns about the company's ability to continue its strong revenue growth.

Lastly, the company's stock-based compensation expense can be volatile and may have contributed to investor uncertainty about the company's financial performance. The company's non-GAAP net income guidance excludes approximately $19 million of stock-based compensation expense in the first quarter and approximately $76 million for the full year.



Analysts' ratings and price targets for ACV Auctions' stock have evolved in recent months, with the average rating currently being "Strong Buy" according to 10 analysts. The average price target is $23.5, which is an increase of 23.72% from the latest price. However, the company's high valuation compared to its peers and historical averages may present a risk for long-term investors if the company's growth prospects do not materialize as expected.

In conclusion, ACV Auctions' stock price decline today can be attributed to a combination of factors, including missed revenue guidance, lower-than-expected Adjusted EBITDA, weak guidance for 2025, market concerns, and stock-based compensation expense. Long-term investors should monitor the company's financial performance closely and consider the risks associated with a high valuation.