CarMax, Inc. Monthly Investment Analysis - December 2025

Published Date: December 20, 2025

Company Overview

CarMax, Inc. (NYSE: KMX) is a well-established leader in the used vehicle retail sector, headquartered in Richmond, Virginia. Founded in 1993, CarMax operates within the Consumer Cyclical sector, specifically in the Auto & Truck Dealerships industry. The company specializes in a diverse range of used vehicles, which includes domestic, imported, and luxury models, alongside hybrid and electric options. Additionally, CarMax offers vehicle auctions, extended protection plans, reconditioning services, and comprehensive financing solutions through its CarMax Auto Finance segment, catering to a wide array of credit profiles.

In a market that is substantially influenced by macroeconomic factors and consumer behavior, CarMax has emerged as a significant player, with a reported revenue of approximately $27.83 billion. Given the current economic climate and anticipated growth potential within the industry, the recommendation for investors is to hold their positions while monitoring developments closely.

52-Week Price Performance Analysis

52-Week Price Performance Chart

The 52-week performance of CarMax Inc. reveals a challenging period for its stock. Beginning the year at approximately $90, the stock has dramatically declined to its current price of $38.78, a staggering decrease of 54.04%. This bearish trend is corroborated by the stock's position below its fifty-day moving average of $39.48, indicating persistent weakness.

Technical Insights:

• Resistance Levels: The $90 mark at the start of the year has acted as a formidable resistance level. Following its decline, the $60 level became resistance, solidifying an overall downward trajectory.
• Support Levels: Currently, the stock is attempting to establish a support level near $38, where it has recently shown stabilization efforts. However, investors should note that the previous support at $60, once breached, has transitioned into resistance.
• Momentum Indicators: The moving average has been declining, signaling weak momentum. The sustained period below this average suggests that significant upward movements require robust catalysts.

As the stock continues to hover near its low end of the trading range, recent price action indicates slight signs of recovery, albeit under a generally bearish trend. A break above the moving average and resistance lines may hint at potential bullish reversals in the future, although until definite signs emerge, caution remains prudent.

Financial Performance and Metrics

In terms of financial health, CarMax has demonstrated considerable operational efficiency despite recent setbacks. The company's total revenue stands at approximately $27.83 billion, supported by an EBITDA of around $1.06 billion. This metric indicates solid operational profitability, providing a foundation for future growth potential.

Key Financial Metrics:

• Current Stock Price: $38.78
• Price Targets:
• High Target: $99.00
• Mean Target: $38.31
• Low Target: $19.00
• Shares Outstanding: 143,062,439
• Short Interest: 15,132,799 shares (approx. 11.8% of float)

With a considerable percentage of shorted shares, approximately 11.8% of the float, investor sentiment appears cautiously bearish. This presents both opportunities for potential short-sellers and risks that the stock may face should a recovery materialize.

Recent News and Developments

Recent events have significantly impacted CarMax's market position. Notably, the company faced turbulence following the termination of long-standing CEO Bill Nash on November 6, 2025. This leadership change coincided with the announcement of a projected decline in comparable store used unit sales by 8% to 12% for the third quarter of fiscal year 2026. Subsequently, the stock price plummeted by 24%, compounding a prior 20% decline triggered by disappointing second-quarter results.

Legal challenges have also emerged as CarMax confronts class-action lawsuits. These lawsuits allege that the company misled investors about its business model and growth prospects, particularly in regard to the impact of tariffs and the quality of its loan portfolio. Firms such as Hagens Berman and Bleichmar Fonti & Auld LLP are leading these investigations.

To contend with these challenges, CarMax has initiated strategic adjustments, including plans to cut selling, general, and administrative expenses by at least $150 million over the next 18 months. Furthermore, the company has launched a new consumer brand positioning campaign, dubbed "Wanna Drive?", intending to enhance the omni-channel customer experience and regain market trust.

Market Sentiment and Analyst Recommendations

Market sentiment surrounding CarMax remains tepid, with analysts cautiously suggesting a "hold" recommendation. A consensus from 13 analysts sees a mean recommendation score of 3.0, indicating that existing investors should retain their holdings rather than engage in aggressive buying or selling.

Analyst Price Targets:

• High Price Target: $99.00
• Mean Price Target: $38.31
• Low Price Target: $19.00
• Median Price Target: $36.00

Given the stock's current trajectory, these projections reflect a degree of calculated optimism amid uncertainty. The significant disparity between the high and low targets demonstrates the volatility and unpredictability in the automotive retail sector.

Conclusion

As CarMax, Inc. continues to navigate a transformative phase marked by leadership change and legal challenges, investors are urged to exercise patience and vigilance. The company's ability to implement strategic changes and adapt to the evolving market conditions will ultimately dictate its recovery potential. While the bearish trend remains a concern, opportunities for patient investors could arise if CarMax successfully addresses its operational shortcomings and stabilizes its financial performance.

In summary, while challenges are evident, the potential for recovery exists, making CarMax one to watch in the upcoming months.