How Auto1 caused its sales to shrink massively in the third quarter and still lost less money - a critical analysis

How Auto1 caused its sales to shrink massively in the third quarter and still lost less money - a critical analysis

According to a report by stock3.com, Auto1 Group recorded a massive decline in sales in the third quarter, resulting in the company losing significantly less money. Adjusted EBITDA reached break-even ahead of schedule, which initially sounds positive for investors. But when we look deeper, we see that the number of cars sold in the core Merchant segment fell 14.1% in the third quarter. Although the gross profit per unit increased, the company remains unprofitable overall as the consolidated loss is still high.

The stock market players react positively to the numbers, although the experts remain rather critical. The impact on the market could be that investors overestimate the short-term improvement in adjusted EBITDA and therefore underestimate the risk of an investment. The long-term forecasts for sales and earnings per share also do not show a positive trend. Therefore, excessive investor euphoria could result in an overvalued stock that does not offer a sustainable long-term prospect. Overall, Auto1 Group can be viewed as a high-risk investment that could be particularly attractive to short-term speculators.