Subject: Re: FKA: KMX
If you don't know their business model, the single most important thing to understand about them is that to a first approximation the price of cars, and used cars, doesn't matter all that much to them. Mainly they make money on volume--a relatively constant amount per car--and used cars get traded in good times and bad. Consequently the stock price goes up and down a whole lot more than the value of the business does.

This has been my thinking as well for the last 3.5yrs following them and they have done exceptionally well maintaining that constant amount per car. What they have not done very well is determining how to keep per store unit sales volumes from dropping. They currently look to be on track to set an all time low this year nearing 3000units/store. They desperately need to figure out how to drive that back up near 4000units/store and get net earnings per store back closer to $4M.

I'm not certain how quickly this can happen with the continued strain on the lower 50-60% of american consumers. The new consumer sales at my employer will be flat at best this year and near the bottom of our normal projected cycle. Price inflation on larger ticket manufactured items like cars has far outpaced wages over the last 5+ years and longer term loans have put customers in some near zero equity positions when they look to trade in for newer goods. Lower interest rates are providing some relief but a customer that purchased something 4 years ago is still likely looking at a 40-50% increase in payment to trade in my world (not cars). I think KMX is feeling similar pressures and may continue to feel them for at least the next 12-18mo.

The one positive note is they seem pretty intent on continuing to buyback 4M or so shares a quarter. Maybe with new leadership coming in they throw all the bad news into these last two quarters and get the ship moving in the right direction. Someone certainly seems to like it this year. And an agentic bot reading your posts is certainly a non-zero probability these days.

Jeff