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Aug. 5, 2019, 2:03 p.m. EDT

Cars.com stock battered as review yields no deal and guidance falls short of estimates

Stock slides 35% after a strategic review found no ‘actionable bids’ even after talks with more than 25 parties

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By Ciara Linnane, MarketWatch


Bloomberg News/Landov

Cars.com Inc. shares tumbled 35% Monday after the digital marketplace for car sales said its board has completed a strategic review without receiving any actionable bids and will now work to execute a plan to drive growth.

The review was first announced on Jan. 16 and came after a push from activist shareholder Starboard Value.

“After consultation with our financial and legal advisors, the board has concluded that the best interests of shareholders are served by continuing to focus on our strategic plan and opportunities to drive growth and shareholder returns as an independent public company,” the company said. “We remain open to all potential value creating opportunities.”

In a detailed statement, the company said it had talks with more than 25 parties on a possible deal without reaching agreement.

See also: Here are the auto stocks to watch as Trump threatens Mexico with tariffs

The announcement came as the company /zigman2/quotes/210492562/composite CARS -9.30%  reported earnings for the second quarter with revenue and guidance falling short of analyst estimates.

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Cars.com posted a net loss of $6.0 million, or 9 cents a share, for the quarter, after net income of $12.7 million, or 18 cents a share, in the year-earlier period. Adjusted per-share earnings came to 30 cents a share, ahead of the 10 cents FactSet consensus.

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But revenue fell to $148.2 million from $168.5 million, below the $160 million FactSet consensus.

“While many trends are positive, continued reductions in OEM (original equipment manufactures) advertising and delayed OEM certifications that facilitate sales to thousands of franchise dealers on a preferred basis, have impacted our 2019 outlook,” said Chief Executive Alex Vetter. “We have taken action to convert the remaining affiliate markets one year ahead of schedule, which will benefit revenue in 2019. We are focused on executing our strategy to return to revenue growth and achieve double-digit Adjusted EBITDA growth in 2020.”

See also: Tesla stock tanks after company’s larger quarterly loss, sales miss

The company is expecting full-year revenue to fall 6% to 9%.

Average monthly unique visitor count grew 13% in the quarter, while total traffic rose 16%. Mobile traffic rose 23% to account for 71% of total traffic, up from 67% a year ago.

See: Ford stock at lowest in nearly 2 months as hopes for the auto maker fade

Chief Financial Officer Becky Sheehan said the company is on track to deliver more than $30 million of annualized cost savings.

The stock has fallen 45% in the year to date, while the S&P 500 /zigman2/quotes/210599714/realtime SPX -4.41%  has gained 14% and the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -4.44%  has gained 11%.

Read now: GM’s pickup trucks carry the day for car maker’s strong quarterly beat

/zigman2/quotes/210492562/composite
US : U.S.: NYSE
$ 3.90
-0.40 -9.30%
Volume: 1.22M
April 1, 2020 6:30p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$287.29 million
Rev. per Employee
$472,948
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/zigman2/quotes/210599714/realtime
US : S&P US
2,470.50
-114.09 -4.41%
Volume: 3.67B
April 1, 2020 5:09p
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/zigman2/quotes/210598065/realtime
US : Dow Jones Global
20,943.51
-973.65 -4.44%
Volume: 508.31M
April 1, 2020 5:09p
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Ciara Linnane is MarketWatch's investing- and corporate-news editor. She is based in New York.

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