CAR delivered a strong FY26 result covered here, which as we saw with several results, saw sharp gains before a resumption of the downtrend. CAR has fallen around 35% over the past 12 months, significantly underperforming both the ASX 200 and Consumer Discretionary sector. The weakness has been driven far more by multiple compression than collapsing earnings, with CAR’s forward P/E falling around 40% from 32.8x to 19.5x, while forward EPS declined a more modest 16.6%. Rising bond yields and macro uncertainty have weighed heavily on what was previously a premium-rated growth stock, while concerns that AI could ultimately challenge the pricing power of online marketplaces have added further uncertainty to already nervous investors.
Operationally, the picture has been more resilient than the share price suggests. FY26 adjusted profit increased 8% to $407m, while FY27 guidance for 11–14% revenue growth initially sparked the rally towards $30. However, subsequent earnings downgrades and renewed pressure on growth-stock valuations quickly erased those gains, with CAR falling around 17% over the past month. The key question is now whether CAR’s derating has gone far enough: at around 19.5x forward earnings, expectations are materially lower, but a sustained recovery will likely require both greater confidence in the earnings trajectory and some relief from elevated bond yields
We like the fact that the short position has fallen from 12.5% to 5% in recent weeks, implying professional investors see little downside from current levels.
- We can see CAR testing new lows in the $20-21 area in the coming weeks, but a ~40% bounce from here wouldn’t surprise.
MM is bullish towards CAR around $21
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