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USED CARS: WHAT HAPPENS NEXT?

If you haven’t been paying attention, it’s been a crazy few years for the used car market.

It started with the pandemic, with used car prices skyrocketing +60% in the US to the highest levels on record throughout 2020-2021 (driven by a massive slowdown in new car production).

Then as the *new* car supply re-stabilized in 2022, used car prices dropped harder than ever, with December 2022 marking the biggest year-over-year decline in prices on record (-14.9%) 👇

Now in the face of a 2023 recession, basically everyone expected this declining trend to continue. But instead, used car prices… are actually climbing BACK again?

Even the experts are a bit bamboozled. 🤔

January 2023 marked a 13-month high in price increases, and Google search queries for ‘used car prices’ are back near their highest levels since the start pandemic. 👇

Used Car Stocks: the hype is back

With all this back ‘n forth, a savvy investor might ask: “but you guys, how does this effect used car stocks??” — well, apparently it’s working out pretty well.

So far in 2023, the top used car retailers have seen incredible stock growth:

• Carvana (CVNA): up +190% YTD 🟢

• Shift (SFT): up +127% YTD 🟢

• Vroom (VRM): up +32% YTD 🟢

And even used car-adjacent stocks are joining in on the fun:

• Uber (UBER): up +33% YTD 🟢

• Lyft (LYFT): up +56% YTD 🟢

• Hertz (HTZ): up +17% YTD 🟢

The hype pendulum is swinging back, baby.

Looking ahead, a whole slew of auto-related stocks are slated to report earnings this week. And whether or not you believe in the hype, the used-car dynamic will assuredly have an effect on their earnings outcomes.

Here’s a quick look at the auto stocks with earnings scheduled this week. Below, we highlight trending news nuggets to help you prepare. 🔥

AUTO NEWS NUGGETS 🚗

Top trending commentary about auto-related stocks with earnings this week

🟢  | 📰 Investors.com | 📆 Uber reports earnings Wednesday before open

“Uber stock is near the top of a 20-week consolidation after a bullish move off lows, making it a candidate for a call option trade of Wednesday's earnings report before the open.”

🟢 | 📰 Zacks | 📆 Lyft reports earnings Thursday after close

“The market expects Lyft to deliver a year-over-year increase in earnings on higher revenues. Its Most Accurate Estimate is higher than the Zacks Consensus Estimate, suggesting that analysts have recently become bullish on the company's earnings prospects.”

🟢 | 📰 InvestorPlace | 📆 Hertz reports earnings Tuesday before open

“Hertz now enjoys a fundamental tailwind… with business travel projected to increase significantly compared to 2022 levels, Hertz should benefit from increased demand... HTZ’s average price target stands at $20.33, reflecting nearly 16% upside potential”

🟢 | 📰 InsiderMonkey | 📆 Toyota reports earnings Thursday before open

“While Toyota’s management is extremely bullish on EV cars and the company is working on several electric models, it’s not letting go of its hybrid investments. This has diversified Toyoyta’s position. Its hybrid cars have a huge demand in the world.”

🟢 | 📰 YahooFinance | 📆 Honda reports earnings Friday before open

“Honda announced a collaboration with Japanese battery maker GS Yuasa to work together on the research and development of high-capacity lithium-ion batteries, starting from the end of 2023.”

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.

SENTIMENT KEY: 🟢=bullish, 🌑=neutral, 🔴=bearish