What Happened?
Shares of used-car retailer America’s Car-Mart (NASDAQ: CRMT) fell 3.4% in the morning session after the company announced a delay in filing its annual report and stated that its financial statements for the past two fiscal years should not be relied upon.
The auto retailer said it was unable to file its Form 10-K by the July 29 deadline due to incomplete disclosures related to loan modifications for customers experiencing financial difficulty. This process led the company to identify significant deficiencies and what it expected to be one or more 'material weaknesses' in its internal control over financial reporting. Consequently, America's Car-Mart warned investors that previously issued financials for fiscal years 2024 and 2025 were unreliable. The company also anticipated receiving a non-compliance notice from Nasdaq, adding to investor uncertainty.
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What Is The Market Telling Us
America's Car-Mart’s shares are very volatile and have had 24 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was about 23 hours ago when the stock dropped 3.3% as reports pointed to a broad-based weakening of consumer health, highlighted by rising loan delinquencies and falling spending intentions. This downturn was fueled by multiple reports signaling a deteriorating financial situation for consumers. Data revealed that even upper-income Americans are increasingly falling behind on credit card and auto loan payments, suggesting big-ticket spending is fading. Further dampening sentiment, the latest Consumer Confidence report, despite a headline increase, showed that consumers are being more cautious. The auto sector also flashed warning signs, with projections for July showing flat sales compared to last year, weighed down by high prices and interest rates.
America's Car-Mart is down 3.6% since the beginning of the year, and at $48.03 per share, it is trading 30.6% below its 52-week high of $69.25 from July 2024. Investors who bought $1,000 worth of America's Car-Mart’s shares 5 years ago would now be looking at an investment worth $497.72.
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