Street View: CarMax's Q2 profit drop signals structural challenges

Used-car retailer CarMax KMX.N reported a fall in second-quarter profit on Thursday, as surplus inventory and fall in prices affected the profit margin

Shares plunged 20% on Thursday

INVESTOR CONFIDENCE WAVERS

J.P. Morgan ("neutral", PT: $50) says CarMax faces structural challenges alongside weak earnings and declining market share; says competitor Carvana CVNA.N is outperforming

Truist Securities ("buy", PT: $47) believes sales decline may reflect on earlier demand pull forward but the growing market shares losses to CVNA is the bigger concern along with challenges in pricing and customer perception

Needham ("buy," PT: $60) says KMX built up too much inventory, which in turn led to price cuts. Brokerage says this hit both sales volume and profit per unit, creating a negative cycle that investors have seen before

RBC ("outperform," PT: $59) says investors are seeking clarity on whether the weak performance was company-specific or a broader economic signal