Ro Khanna Was Buying Carmax Into Earnings but Stock Declined

CarMax (KMX:US) fell 3.66% yesterday after reporting disappointing earnings. Shares initially plunged about 12.24% at the open before racing higher as some investors obviously used weakness to buy the beaten-down stock (almost -55% year-to-date).

CarMax delivered a big miss relative to analysts’ expectations. The used vehicle retailer posted adjusted earnings per share of $0.24 on revenue of $6.51 billion; a disappointing print compared to the consensus for earnings of $0.65 on revenue of $7.16 billion. 

Given weak Q3 results, the company also placed its stock buyback plan on hold, citing quarterly performance and “continued market uncertainties.” Used vehicle sales fell 19% year-over-year to $5.20 billion, missing the consensus of $5.48 billion while wholesale vehicle sales plunged as much as 40% YoY.

“In response to the ongoing pressures across the used car industry, we have taken deliberate steps to support our business for both the near-term and the long-term,” the company said in a press release.

Yesterday’s low of $52.10 also marks the 31-month low for KMX stock. This way, the market punished investors that decided to hold KMX shares despite the shocking performance of companies operating in this sector. Shares of Carvana, CarMax’s rival, are down over 98% YTD with the company facing bankruptcy. 

One of the investors who was actively buying CarMax stock in recent weeks is Congressman Ro Khanna. Earlier this month, the Congressman from California disclosed 12 purchases in ranges of $1,000 - $15,000 KMX shares. 
Mr. Khanna was buying throughout the month of November and likely paying in the $60s for each share with his position likely down more than 10% after yesterday’s trading session.