CarLotz Inc. (NASDAQ: LOTZ) stock gained 28.68% at the back of a drop below its 200-daily moving average. The stock is running hot despite investigations from shareholder rights company Johnson Fistel, LLP over federal securities laws violation.
CarLotz reported disappointing Q1 2021 results
CarLotz released its financial results for the first quarter of 2021 on May 10, 2021. The company announced a $0.15 loss per share, missing the $0.01 consensus earnings expectation. CarLotz’s stock price dropped as a result of this news, ending down 14.44% on May 11, 2021. Surprisingly, the company didn’t offer estimates for its earnings per share for the second quarter.
William Blair analyst Sharon Zackfia said that the omission will lead to investor angst about the company’s visibility towards full-year targets. Although management indicated that GPU had significantly improved on a sequential basis, the company missed its initial GPU targets for Q4 2020 and Q1 2021. According to Zackfia, the company is also facing constrained inventory levels because of the fast-growing wholesale prices that have resulted in some consignors liquidating through wholesale rather than consignment.
CarLotz’s corporate sourcing partner halts consignments
Then, on May 26, 2021, the company announced that consignments from its profit-sharing corporate vehicle sourcing partner had been halted. In the first quarter, the sourcing partner was responsible for over 60% of the cars sold and supplied by the company. CarLotz’s stock price dropped as a result of this news, closing down nearly 13% on May 26, 2021.
The consignment-to retail used car marketplace operator cut is year guidance because of the current business climate, which has been affected because of the lack of cars from the profit-sharing account. This was coupled with an unpredictable chip shortage timeline for new cars and the impact on retail and wholesale automotive markets.