Consumers have had it with high prices. In addition, these dealers have company specific issues.
By Wolf Richter for WOLF STREET.
Shares of used-vehicle dealer CarMax plunged by 24% today, to $30.88 at the close, the lowest since October 2012, and down by 80% from the crazy free-money peak of $154.85 in November 2021, after the company issued a revenue and earnings warning for the current quarter, including a unit sales decline of 8% to 12%, a charge of 9 cents per share, layoffs, and some house-cleaning “to strengthen its business,” whereby CEO Bill Nash is getting swept out.
This is just the latest mess to hit the stock. In 2020 to 2022, used vehicle dealers were relentlessly jacking up prices as free-money-besotted consumers were suddenly willing to pay whatever to the astonished dealers who’d never seen anything like that in their lives before. But then that ended.
CarMax has been reporting bad stuff ever since. And the shares [KMX], being now down 80% from the peak, entered today with great fanfare into our pantheon of Imploded Stocks. To qualify for a spot, shares must have plunged by at least 70% from their recent peak.
CarMax has some company in our Imploded Stocks.
Subprime-specialized used-vehicle dealer-lender America’s CAR-MART [CRMT] made it into our Imploded Stocks in November 2024, and has since then plunged further, including 5% today to about $20.50 a share, where they’d been in 2009; since their peak in May 2021, shares have collapsed by 88%.
Used vehicle ecommerce dealer Vroom, which went through a red-hot IPO in June 2020, collapsed and exited the used-vehicle business in early 2024, and filed for bankruptcy in November 2024. Its shares got essentially wiped out during bankruptcy, with existing shareholders getting only 7% of the restructured company.
Online used-vehicle dealer Shift Technologies also filed for bankruptcy and was liquidated, and its stock died in our pantheon.
None of this surprised us here. Back in April 2022, we mused out loud that used-car startups Vroom, Shift Technologies, and Carvana “face an existential crisis,” and all of them had by then been firmly situated in our Imploded Stocks.
What ended up surprising us was Carvana. In a masterful stroke of manipulation, it threatened with bankruptcy in late 2022 and early 2023, and its shares and bonds collapsed. A lot of those bonds got bought for cents on the dollar by a group of PE firms, led by Apollo, and these PE firms and Carvana then made a deal of a debt exchange that effectively wiped out $1.2 billion in debt, upon which Carvana booked a one-time gain of $889 million in Q3 2023 as a result of the debt forgiveness.
And shares [CVNA] exploded from just a few dollars in December 2022 to a new intra-day high of $413 at the beginning of October. In the six weeks since then, shares have re-plunged by 30%, including about 6% today.
Specialized subprime used-car dealer-lender chains, all privately owned, have been keeling over and filing for bankruptcy since early 2023, several of them owned by PE firms.
Currently, privately owned AI-powered fintech dealer-lender-chain Tricolor is getting picked through in bankruptcy court amid a mushroom cloud of fraud allegations.
These subprime dealer-lender chains (“note lots,” they used to be called) are a slimy high-risk-high-profit breed and a tiny portion of the used vehicle market. Since these privately-owned dealer-lender chains were never publicly traded, they never made it into our Imploded Stocks.
Used vehicle dealers face a problem: price gravity has returned.
Used-vehicle retail prices had spiked by 55% in just two years, from mid-2020 to mid-2022, as per the used-vehicle CPI by the Bureau of Labor Statistics. Those were the good times for those dealers when consumers were eager to pay whatever, and revenues and profits just exploded.
Used vehicles became ridiculously expensive – too expensive to sell after consumers sobered up and remembered that they hated inflation, hated high prices, hated getting gouged.
To make their sales, dealers started backing off the high prices, and used vehicle prices began to decline in the second half of 2022 and declined through August 2024. And the business of selling used cars became tough again, amid interest rates that were historically normal, but much higher than in the years before.
Since August 2024, retail prices have meandered higher again but face a lot of resistance from consumers. People just hate, hate, hate high prices. And that’s what CarMax is feeling.
Used-vehicle wholesale prices had spiked in a similar range from mid-2020 through mid-2022, as per Manheim’s Used Vehicle Value Index. Dealers go to these auctions to replenish their inventory; these auction prices are part of their costs of goods sold.
So when prices spiked because dealers were maniacally bidding them up at the auctions, knowing that their customers were willing to pay whatever, costs for dealers also spiked, but dealers stayed ahead of that by raising their retail prices even faster, and they could because consumers were willing to pay whatever, and revenues and profits exploded. It was the most amazing time in the car business ever.
But by mid-2022, consumers were no longer willing to pay whatever, and dealers started to cut prices and make deals, and they cut back on what they were willing to pay at auctions, and their costs went down, but on the retail side, they had to cut prices faster to maintain their sales, and revenues and profits began to shrink. This is also what happened to CarMax.
Since August 2024, wholesale prices have meandered higher but now also face price resistance from dealers that face price resistance from consumers.
Used-vehicle unit sales have been growing over the past two years. And year-to-date, used vehicle unit sales are also ahead of the prior years.
It’s not that demand has dropped, it’s that the 2022 prices are not economically feasible and even current prices, though lower than they had been, are still very high and still face lots of resistance. This is the hangover from the good times of jacking up prices into the stratosphere.
Dealers wishing to make their sales are having to give up profits that had gotten obese during the high-inflation years.
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LOL, dynamic pricing….sounds so hip for another thing they lube you up with stick you from the rear end as hard as possible….
Btw, in a sane world, with Carmax imploding, you would expect Carvana to be there already but seeing they are still hovering around $290, close to their 2022 high with a 66 P/E…I guess we don’t live in a sane world and haven’t for a very long time…
There is a whole section about CVNA in the article above. It’s kinda fun.
Among other things, that section says that CVNA has dropped by 30% over the past six weeks. But there’s a lot more to it. Worth reading.
Carvana (CVNA); its tumultuous history, its controversial founders and management, its business model as a deep subprime used car loan originator, two SEC investigations and its relationships with Ally Bank and Cerberus Investments Global Trust is covered in depth in a report by short seller Hindenburg Research
https://hindenburgresearch/carvana. The report is undated but includes an item as recent as Feb. 2025. It is fun reading.
We went car shopping for our teenage son this summer and the first place we looked was Carmax and I just about had a heart attack when I saw their prices.
We ended up going with Carvana, it was crazy how easy the process was compared to prior purchases. (I’m sure we didn’t get the ‘best possible deal’ but it met our budget and was stupid easy).
The essence of casino & that of stock market are the same. Just success achieved in casino industry somehow has this stereotypical bad image associated with mafia, drugs, prostitution etc … yet success on WS is pictured with S. Hampton water front mansion, customized business suit, interviews during prime time on MSM, gorgeous women with nothing between their 👂😂 until you accept this possible way of looking @ stock market, nothing makes sense 🫢🤫🤭
Well said!
Wonder what will become of those expensive car dispensing towers? About 10 fully functional ones exist I heard.
Maybe used for another imploding sales corp gimmick, or just a really cool condo car parking set-up, or even made into cool condos themselves?
Be a shame to just tear them down….but then wasting money is often tied to making even more money with all this wild financial engineering going on.
The simple book cooking of past schemes has given way to lobbying to make laws allowing some really strange money “instruments”.
Like vaporware, sorta.
“The crime is not in what the Law forbids…it is in what it allows.”
Or like the Higgs Boson. Forced out of the quantum soup into our much lower ambient energy world by the high machines energy at Cern?
Going from words to real money and back freely?
Quantum Fungibility…..
Not just the stock market. The entire economy is an inescapable casino. See which was actually titled in print “The Inescapable Casino”
Carvana’s margins are suspect and related-party Drivetime hides a whole menagerie of ugliness. Under formal SEC investigation. Imploding ABS waterfalls. Their ADESA subsidiary a multiple creditor to Tricolor. Only a matter of time until it comes tumbling down … much much further.
We would with open arms welcome it back into the Imploded Stocks.
Wolf, you have a secondary career option in comedy.
Previous career.
Link takes you to one of my books; click on the “read sample” button under the book cover to get a free taste:
http://www.amazon.com/gp/product/B009NOFGXA/
Please let us know when restaurants and grocery stores start getting the same treatment!
Restaurants and bars are doing just fine, sales are booming, in fact, despite some stupid-ass headlines in the permanent crisis media, though some specific restaurants don’t make it, which is always the case with restaurants, but new ones spring up all the time, which is part of the constant renewal cycle, and some specific restaurant chains serve terrible overpriced junk food and no one should ever eat there, and fewer people do, and it shows.
And grocery sales are doing fine too, though some grocery sales have walked off to ecommerce, which is booming. Walmart, the largest grocer in the US, has a booming grocery business 🤣
That said, I generally don’t cover specific restaurant chains, though I cover big retailers from time to time.
Here are restaurant and bar sales (red) and grocery store sales (blue) to give you an idea how drunken our sailors continue to be, despite the stupid-ass headlines in the crisis media:
This is also despite constant articles in the permanent crisis media about how restaurants can’t possibly survive in the face of minimum wage increases.
But HCOL living areas have had $10-15 minimum wages for many years now and there has been no noticeable loss of business or number of businesses (despite many doom and gloom articles saying otherwise).
Exactly. Minimum wage in SF is $19.18/hr, and the City has a thriving and immense restaurant scene.
I happen to be looking at Target’s shares today and it’s less than $10 from joining the pantheon! Nice dividend though, if it’s safe.
Yes. It has been on a huge 5-year roundtrip.
A problem with Target is their e-commerce game sucks.
I root for them as a hometown hero (my dad was relocated to Mpls. Under Dayton- Hudson a half century ago. They were bought by Target).
I tend to get a lot of my groceries from the nation’s largest grocer: Wally. I used to shy away from them, until I had a family and couldn’t justify paying slightly more for the exact same products next door.
Regarding restaurants and HCOL areas: the unofficial “minimum wage” in my area is $20+ not to mention that we have months of “shoulder season” where restaurants close altogether. It’s a tough business, but people will pay.
I shop at both Target and Walmart (and order online from both). The problem with Target is that I find Walmart superior in every way, from selection, to shipping speed, to pricing (slightly) and several others. I go to Target if it’s on the way, but I’d prefer Walmart all else equal. I suspect there are others in my position.
On a related note, what do you make of (1) the drop in chipotle or cmg stock (2) the recent short report on doordash or dash by Culper research ?
What would that look like in real money terms?
Similar, but with restaurants outdistancing grocery storers even more, but both slopes would be rising less steeply. Both have grown faster than their respective inflation rates (for restaurants, the “CPI food away from home;” and for food and beverage stores, the “CPI food at home”), but restaurants have grown substantially faster than food and beverage stores.
Year-over-year:
Restaurant sales: +6.6%
CPI food away from home: +3.7%
Since January 2023:
Restaurant sales: +17%
CPI food way from home: +12%
Sorry to shoot down your consumer-is-collapsing-and-inflation-is-hiding-it hopes.
The last couple generations grew up on eating out. People will cut out other things before they stop eating out. Most don’t enen know how to cook basic meals anymore. Many resteraunts and bars will fail but it’ll take much more economic pain before the entrire sector craters.
While back I’m visiting bro in Victoria on Van Isle, BC, a big city for a guy who lives in Nanaimo. Bro says wanna pick up some food at Walmart. Walmart? I say. For a hot dog?
I’m surprised that about 20 % of the store is now food. A lot of frozen or ready to heat, but also a lot of just stuff you’d expect in a supermarket: steaks, roasts, uncooked chicken as well as roasted.
Wally Just chased the higher prices of food I guess. Cooked or frozen food is kind of a hybrid of goods/ services. The input is food, the prep is a service.
Maybe next year Home Hardware will have hot dogs.
“Maybe next year Home Hardware will have hot dogs.”
Or Canadian “not just tires” Tire!
I agree that people love eating out more than ever before, and all restaurants from fast food up to the pricier places are packed, but the problem with that reasoning is that grocery stores are also doing very well which implies people are eating in a lot too (though many grocery stores also have cafeterias in which case they double as restaurants).
You can only cannibalize a host so much. After that, the vampire dies.
I hope we someday see a deep dive on the contribution of dynamic pricing to inflation.
We give up information through our online behavior, information that is correlated with disposable income. It seems price discrimination can be more effective today than in the past.
I’d love to know whether Walmart’s deal with OpenAI to have people shop through the ChatGPT app includes dynamic pricing based on OpenAI’s knowledge about user wealth.
One can only dream. I’d love for Jeff Bezos to have to pay $12,000 for a dozen eggs, and $50,000 for a bottle of olive oil.
Well said! The disparity from the 0.01% and the rest of us is really what is killing this country. It was a while back but in the 70s a household managed to buy a home, car or two, collage for the kids, vacation, and save for retirement all on one wage earner. Try that today
People are still doing all that. 65% of households are homeowners, and many of the renters are “renters of choice” who choose to rent but could buy. Higher-end rental towers and built for rent single-family homes are all the rage.
Content information” refers to the actual text, prompts, questions, responses, and any uploaded files that a user enters into the ChatGPT interface. This can range from a simple query for a shopping list to sensitive personal details a user might inadvertently share.
The term “general conversation topics” refers to any interaction within the ChatGPT app interface, and is not limited to shopping-specific queries.
Essentially — if you opt in and don’t pay attention, and drop privacy concerns, who knows whutup — i can’t believe all this crap isn’t headed towards greater, more granular, more parasitic targeting — more predatory encroachment — and definitely dynamic pricing.
It’s not unlike the latest gimmick by Wmt to sell thanksgiving meals at a big loss, so you’ll look the other way — as they continually hike other prices to offset the hit.
There’s literally no free lunch in any of this stuff,
Virginia Gov.-elect Abigail Spanberger — who promised during her campaign to prioritize affordable energy if she won — on Sunday doubled down on her views of the “energy crisis” that her state will face without new policies to hold the biggest users accountable.
“There’s some bad energy policies in some of our neighboring states that have driven up prices, particularly in southwest Virginia,” Spanberger said Sunday on “Face the Nation with Margaret Brennan.” “We have to be clear-eyed about the fact that we will have an energy crisis headed into the future.”
Virginia has the world’s largest concentration of data centers, which are facilities designed to house the technical infrastructure that allow artificial intelligence to operate, and demand for them has only continued to grow as the AI boom proliferates. But these data centers use massive amounts of energy.
SOME people’s fun with computers continues……AI…Chat…Auto….Communication….data stashing…..blah blah blee
This comment section constantly gets attacked with spam from data centers in Ashburn, VA.
Thanks for info. I can maybe pursue that a bit more.
You don’t see what I see in my commenting software and firewall. I see AI-generated spam comments promoting something, such as porn or whatever, hundreds a day, that summarize the article to make it harder to detect as spam… but then there are the links. AI and AI data centers are being used for all kinds of stuff.
Thanks.
Very recent model year used EVs are blue going for big discounts over new MSRPs.
A 1 year old Ioniq is going for $30k instead of $55k new.
USed EVs – it’s all about the battery. Lithium ion batteries are ancient compared to solid state batteries.
Used EV prices are far higher than ICE vehicles:
There are brand new ICE vehicles which can be had for 30% off msrp. Jeep, to name one brand….
For some strange reason I don’t know a single person who bragged about owning this stock. In fact nobody took any losses because nobody owned it. The only owned stocks are the ones that go straight up and to the right forever.
In fact, recently I was talking with a close acquaintance who regaled me with their financial acumen, specifically stock-picking and how they were “up 50%” this year. You could have heard a pin drop when I asked “well, do you have any that AREN’T up?” A lot of cherry-picking going on right now…..
When I began to see 2+yr old “pre-owned” selling for 95% of MSRP, and sometimes above sticker for hot models, I stopped looking.
You get the same dribble from a casino or sports gambler. Always have a story of the last jack pot or 7 team parlay they won.
Excellent artcle!
CarMax need to implement Tijuana style haggle-pricing and just take whatever they can get for their used cars. The ‘fixed-price’ model is stupid.
Isn’t a “fixed price” model part of what drove Saturn out of business?
People say it’s what they want, but then they don’t buy there.
Opendoor is an ‘AI company,’ new CEO says. The stock is still falling after earnings.
OPEN -9.27%
These people try very hard to make you laugh.
In industries that have management filled to the brim with 50+ year olds, they latch onto any trend to seem cutting edge.
AI is the current in a long list. In a recent leadership meeting, we were asked to report back two ways we have integrated Copilot into our work.
It’s all so that one boss can go to their boss who can go to their boss all reporting back that AI is solving all of the world’s problems (the most important problem, of course, being growth slowing down from the Covid price increases out the wazoo years)
PS – most people are just using Copilot to help draft or proofread emails, so revolutionary. Looking forward to a future where everyone’s inbox is just gazillions of AI emails talking back and forth to each other.
My favorite is HR discussing how they get Copilot to make their (rude) emails sound more empathetic.
As one in my 9th decade, I could not AGREE more with your conclusions crzy!!!
Time and enough to stop ALL the generational challenges far damn shore…
Good luck and God Bless all, repeat ALL willing and able to discuss rationally and peacefully, OF any age and OF any persuasion,,, in spite of, or possibly because of the vast history of USA otherwise….
”May we live in ”interesting times” INDEED!
AGI is becoming a conspiracy theory per this article:
https://www.technologyreview.com/2025/10/30/1127057/agi-conspiracy-theory-artifcial-general-intelligence/
IDK if I agree, but the parallels pointed out by this author are striking. We all believe something magical is going to happen, and any skeptic is shunned.
Something something something it’s not a loss until you sell…. I don’t have to sell I can afford to hold until it bounces…. Cramer from CNBC says don’t sell because it’s going to go up just like Lehman Brothers was going to skyrocket. My van down by the river is quite cozy.
Van_Down_By_River?
“Van_Down_By_River?”
Its a chris farley skit from 90’s saturday night live.
There was a commenter here by that name — and commenters occasionally change their screen names.
Dident cramer call svb one of his biggest winners right before it crashed. He is like a stopped clock.
A lot of haters in this thread, CarMax is the flagship car dealership in the US. From my own experience I have always had a pleasant time purchasing a vehicle from them. The 10-day return policy, and no their no bs MaxCare warranty all very great. They’ve been around for far longer than Carvana and offer a way better value proposition at this share price. They’re still a profitable business just facing industry specific headwinds that will pass in time.
A general stock market crash would be a good thing for this country.
Hoping the entire stock market gets welcomed into the open arms of Wolf’s Imploded Stocks. The insanity is ridiculous and a return to real sanity and realistic pricing would be a very welcome development.
I was thinking more along the lines of a huge sink hole collapse under the Capitol while Congress is in session.
We all have different opinions on root causes I guess,
The fact that our nation’s air traffic controllers are not getting paid, the folks who help ensure the safety of air travel, while Congress, the folks who haven’t shown up for work for a month and are doing their best to get rid of health insurance and food for millions of Americans, are getting paid, boggles the mind. A sinkhole seems too easy an end…
Read between the lines. They are one team and they are telling you they don’t care about you. In fact, they hate you and me and everyone else they are elected to “serve”
My hope from this latest shutdown mess is that ATC and TSA get privatized, but I’m not that lucky.
I agree. There seems to be a level of financial nihilism among Gen Zers, that the only way to get ahead is to put all their money into the casino, no matter how overpriced it is.
The problem is that it’s like a hamster wheel. Any gains they get by this bubble will be dwarfed by the top 1%’s stock gains. If people want affordability, the stock market needs to crash. It’s that simple.
But we voters keep telling our politicians to prevent a recession at all costs. This has led our politicians to fulfill our wish, which can only be done through feudalism. Welcome to serfdom.
Wolf!! Slightly different subject. But need your view with some data if possible. Since 1990s I have been hearing of Americans living paycheck to pay paycheck. Bernie sanders keeps parroting it every meeting. I read 62% of Americans have 401K highest ever. What is your view? Thanks
I have expressed my view on this many times. All these paycheck-to-paycheck headlines are unmitigated clickbait bullshit, and you see this after you actually look at the data including the data by the Federal Reserve, which is often used for these headlines. But no one ever looks at the data, just regurgitates clickbait headlines. The internet is a toxic cesspool of bullshit.
As frequently occurs, this best cure for high prices is high prices!
Lol good. I hope everyone of them go out of business for this BS.
And Tesla announces a potential $1 Trillion pay package for Elon. That’s one million piles of $1 million dollars. A million millionaires, except in this case, it’s ALL for ONE man. That is INSANITY ON STEROIDS. Tesla, as a company, should be required to REFUND every single PENNY they got in money from the US government. EVERY LAST PENNY. This is a complete mismanagement of their/our money amd resources. Their board of directors ahould all be fired immediately.
So lets wait and see. There are a lot of hoops to jump through before Musk becomes a trillionaire, including a sky-high price of TSLA.
I agree. Lets also get every f*cking penny we the people give to insurance companies. Self employed & the AFFORDABLE care act has been a disaster
for us. Once again, I will be trying to find a provider for next year.
Carmax has not outbid me on a trade in a long time. I think they are getting realistic on what inventory is worth so they can make a margin. Carvana however is still going balls to the wall. I lost a few trades to absurd bids. I don’t see how they make any money on the actual cars. Must be all backend and creative accounting.
Can we get a deep dive into Carvana? I have read several dives into their nepotistic money laundring, plus that hive sort seller’s report.
I’m waiting for it come back home into my pantheon of imploded stocks. I’m just amazed how they got away with the debt exchange scheme.