CarMax Is Betting That Lower Prices Will Drive Market-Share Gains

CarMax (NYSE: KMX) recently raised its long-term growth outlook after the company gained market share in the expanding used car industry last year. Yet the stock price fell immediately following the fourth-quarter earnings announcement and remains far below the market's return so far in 2022.

That gap can be explained by the company's decision to prioritize market-share growth over short-term profits. Rather than boosting profitability by capitalizing on historically high used-car prices, CarMax is instead seeking to gain market share by keeping its prices low when compared to rivals.

Let's take a closer look at why that approach might pay off for shareholders.

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Source Fool.com