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No One is Buying Cars

Jun 18 2008

No One is Buying Cars

Carmax Misses

            Carmax should have done alright when it reported earnings earlier today as the car dealership sells mainly used cars. The ones that are inexpensive compared to the auto dealers selling the straight from the factory more expensive versions. But Carmax couldn’t hit its numbers as it had a lot of SUVs on its lots that it couldn’t sell to consumers looking for something north of 30 on the gallons per mile readout.

Suspends Forecasts

            In a surprise move, the company suspended its earnings forecast which equates to ‘there will be no earnings’. Shares of Carmax (KMX) moved down over 12.5% by midday trading. Analysts were looking for 22 cents but the company could only make 13 cents during the latest quarter. Sales were light also coming in at $2.21 billion on expected $2.28 billion.

General Motors and Ford

The results do not bode well for other auto industry companies General Motors (GM) and Ford (F) which both dropped close to 5% in value. General Motors reached a new 52 week low. The trade has been short General Motors but now getting short a little Ford and possibly Carmax on an up day, could be decent trades.

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