CarGurus Shares Soar 20.36% on Strong Q1 Earnings

CarGurus (CARG) shares surged 0.21% today, marking the fourth consecutive day of gains, with a cumulative increase of 20.36% over the past four days. The stock price reached its highest level since February 2025, with an intraday gain of 1.79%.

The strategy of buying CARG shares after they reached a recent high and holding for 1 week yielded moderate returns over the past 5 years, with a 9.54% annualized gain. However, the maximum drawdown of 16.72% during the 2023 bear market highlights its vulnerability in downturns. Overall, this strategy offers modest growth but comes with significant volatility, making it suitable for a tactical, low-risk tolerant approach.

CarGurus reported its first-quarter 2025 earnings, with earnings per share (EPS) exceeding expectations and revenue reaching $225.2 million. This strong financial performance has bolstered investor confidence in the company's growth prospects.

During the first quarter, CarGurus experienced significant growth, driven by increased user traffic. The company achieved 90% gross margins and maintained high dealer retention rates, which led to an upgrade of the stock to a "buy" rating by analysts.

At the JPMorgan conference, CarGurus projected double-digit revenue growth, supported by its predictable subscription-based marketplace and a diverse customer base. This optimistic outlook has further fueled investor enthusiasm for the stock.

The Royal Bank of Canada reaffirmed its "outperform" rating for CarGurus, reflecting positive analyst sentiment and reinforcing the company's strong market position. This rating, combined with the company's robust financial performance and growth projections, has contributed to the recent upward trend in CarGurus's stock price.