Why TrueCar Stock Is Up Over 10% Today
What happened
Shares of online car-shopping service TrueCar (NASDAQ: TRUE) were on the rebound on Monday, after a post-earnings drop on Friday eliminated over a quarter of their value.
As of 2:30 p.m. EDT, the stock was up about 12% from Friday's close.
So what
TrueCar reported after the bell last Thursday that its second-quarter results had missed Wall Street's estimates as well as its own prior guidance. The company also made a significant cut to its full-year 2019 guidance, saying that this year's results will fall short of 2018's.
Image source: TrueCar.
Investors reacted about as you'd expect: The stock got clobbered in after-hours trading on Thursday. Selling pressure continued on Friday, with the stock down over 37% at one point during the trading day -- but then bargain hunters seemed to step in, and shares ended the week down a mere 27%.
Despite the additional gains on Monday, as of 2:30 p.m., TrueCar was still down 18.7% from Thursday's close.
Now what
TrueCar still has a problem. The investment case for the company anticipates revenue and earnings growth, but it has now guided to year-over-year declines in revenue and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) in 2019.
Given that the pace of new-car sales in the U.S. is still decent, that decline raises a big question: How will TrueCar fare during the next recession? Investors may not want to stick around to find out.
John Rosevear has no position in any of the stocks mentioned. The Motley Fool recommends TrueCar. The Motley Fool has a disclosure policy.
This article was originally published on Fool.com