Carsales.com Hits a New All-time High

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Car sales are down.

I mean really down…down to 2011 levels.

Industry experts are blaming lending problems, poor wage growth, the housing market and even the drought!

I guess nothing’s off-limits here.

Federal Chamber of Automotive Industries counted 1,062,867 new vehicles were sold.

The problem here though is that’s 90,000 less than 2018 figures.

Seems grim for the Aussie automotive market. For new cars at least.

But while that’s going on in the background. Carsales.com Ltd [ASX:CAR] shares have hit an all-time high.

I’ll show you in a moment. It could be alluding to something else.

Not sure who Carsales.com is? Well, let’s find out.

Who is Carsales.com?

Carsales.com has an online classifieds business for cars, motorbikes and boats.

They’re most known for their car buying and selling service.

Perhaps you’ve used them in the past to either buy or sell your car.

Carsales.com also offers an online advertising solution. This is mostly done as a classified ad. Companies use it to sell new and second-hand cars across the website.

Of course, there’s much more to Carsales.com than that. But that’s what we know them for.

Oh, and if you’re wondering, the company was founded in 1996 right here in Richmond, Melbourne.

Alright, let’s get back to it.

Here’s a healthy chart

Car sales have been dropping. That’s old news now.

What I want you to focus on is the growing share price of Carsales.com

Take a look at it.

Port Phillip Publishing

Source: TradingView

[Click to open in a new window]

The chart above is the weekly bar chart for Carsales.com.

It starts in 2014 and has been growing over the past several years.

Today, the share price is $17.45, it’s an all-time high for the company.

It’s interesting to watch this because this is alluding to something completely different.

New car sales are down. Yet Carsales.com shares are up. That tells me their revenue is growing.

You shouldn’t write off a whole industry just because some number is declining…

I don’t profess to fully understand what’s happening here. There’s no news about this.

But I think we just look at the obvious.

People are changing their habits.

Renew Economy reported last October that Tesla Model 3 sales have smashed old records.

Fortunately, no matter what the change. For as long as Australians are buying and selling cars.

Focus on the company revenue

Whether new, used or electric, such as the Tesla…

Carsales.com can clip some of that as revenue.

The companies October 2019 AGM presentation also highlighted this.

Revenue was up 11% to 418 million. This was across both private and dealer listings.

The company also saw an increase of 39% in revenue for the international segments, also.

Anyway, a rising share price tells me that investors are expecting revenues to continue to grow.

If that’s the case, then this is a stock you want to be watching.

That’s despite a declining new car sales market.

As always, this is not a recommendation to buy or sell CAR. It’s an update only. I hope you found it useful.

Until next time,

Jonathan Evans Signature

Jonathan Evans,
Analyst, Profit Watch

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