What Happened?
Shares of online used car auction platform ACV Auctions (NASDAQ:ACVA) fell 35% in the morning session after it reported disappointing third-quarter results and provided a weak financial outlook.
The company posted a GAAP loss of $0.14 per share, double the $0.07 loss that analysts had expected. While third-quarter revenue of $199.6 million met Wall Street's expectations, growing 16.5% year-over-year, the company's guidance concerned investors. Management's forecast for the fourth quarter projects revenue of $182 million, which is nearly 5% below consensus estimates. Furthermore, the company's full-year EBITDA guidance of $57 million also fell significantly short of the $68.56 million that analysts had anticipated. The combination of the earnings miss and a weaker-than-expected forecast triggered the sharp sell-off.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy ACV Auctions? Access our full analysis report here.
What Is The Market Telling Us
ACV Auctions’s shares are very volatile and have had 20 moves greater than 5% over the last year. But moves this big are rare even for ACV Auctions and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 27 days ago when the stock dropped 6% on the news that President Donald Trump threatened to impose 'massive' new tariffs on Chinese goods.
In a post on his Truth Social network, Trump stated that his administration is calculating a 'massive increase of Tariffs on Chinese products.' Trump targeted China's tightening controls on rare earth metals, which are vital components in many technology products from electric vehicles to defense systems. The threat immediately impacted the market, with the tech-heavy Nasdaq sinking 2.4% and the broader S&P 500 falling 1.7%. Such tariffs could significantly disrupt the global supply chains that many technology companies rely on for manufacturing and components. The policy uncertainty also raises fears of retaliatory measures from China, which could impact sales in a key international market for many U.S. tech firms, leading to investor concern over future profitability.
Earlier in the week, China announced new export controls on the critical minerals. Beijing's Commerce Ministry stated that foreign suppliers now need government approval to export products containing certain rare-earth materials. These materials are essential for producing high-tech goods, including computer chips, electric vehicles, and defense technology. Analysts viewed the move as a strategic assertion of China's dominance in the global rare earth supply chain, particularly amid ongoing trade tensions.
ACV Auctions is down 75% since the beginning of the year, and at $5.23 per share, it is trading 77.4% below its 52-week high of $23.17 from December 2024. Investors who bought $1,000 worth of ACV Auctions’s shares at the IPO in March 2021 would now be looking at an investment worth $167.20.
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