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CarGurus (NASDAQ: CARG) Surges Higher on Big Beat

AInvestFriday, Aug 9, 2024 12:58 pm ET
1min read

CarGurus (NASDAQ: CARG) saw its stock surge by 17% following its impressive earnings report, which beat analysts' expectations. The company, which operates an online automotive platform for buying and selling vehicles, delivered its most significant earnings per share (EPS) beat since Q3 2023, accompanied by modest revenue growth.

In addition to the strong Q2 performance, CarGurus provided an optimistic EPS guidance for Q3, further boosting investor confidence.

One of the standout highlights from the earnings report was the continued acceleration of CarGurus' Marketplace business, which achieved a 14% year-over-year revenue increase, amounting to $195.2 million.

This marked the largest quarterly revenue growth in this segment since 2021, underscoring the company's effective strategies and growing market presence.

In the U.S. market, CarGurus noted a significant shift in its customer base towards larger dealers with higher advertising budgets. These dealers have shown an increased demand for data insights and analytics, which CarGurus provides through its platform.

This shift not only reflects the platform's growing influence but also highlights the increasing value that larger, more resourceful dealers find in CarGurus' offerings.

Despite the positive earnings report, it's worth noting that CarGurus' stock had been underperforming in recent weeks, having declined more than 15% from mid-July leading up to this earnings announcement.

This recent weakness in the stock likely contributed to the outsized positive reaction following the earnings beat, as investors saw the report as a strong indicator of the company's resilience and growth potential.

CarGurus' latest earnings report showcased robust performance in its core Marketplace business and provided an encouraging outlook for the next quarter. The strong revenue growth, particularly in the U.S. market, along with the company's ability to attract larger, more sophisticated dealers, positions CarGurus well for continued success.

The stock's significant jump following the report suggests that investors are regaining confidence in the company's growth trajectory, making it a noteworthy player in the online automotive platform space.

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