Because of high demand, and low inventories, the average price listed for used cars has reached an all time high. And KAR Auction Services’ (KAR) shares have gained 13.8% in price over the past month. However, the company’s financial growth has been sluggish. Furthermore, considering KAR’s lean profit margins, will it be profitable to bet on the stock now? Our view is that KAR Auction Services, Inc., Carmel, Ind., sells used vehicles and provides related services such as vehicle remarketing for the automotive sector in the United States, Canada, Mexico, Europe, Canada, Mexico, Canada, and the United Kingdom. KAR shares have slumped 8.7% in price over the past year and 10.6% year-to-date to close yesterday’s trading session at $16.13. The stock currently trades above its 50 day moving average, but just slightly below its 200 day moving average.

The high demand for trucks and cars is leading to sky-high prices at wholesale. “The average price of a vehicle sold at physical auctions is now more than $5,000 higher than this same time in pre-pandemic 2019,” said Tom Kontos, chief economist for KAR Global, which is based in Carmel, Ind. Automakers were forced to reduce their production due to global shortages of semiconductor chips and lockdowns caused by the pandemic. A shortage of new cars is driving demand for second-hand vehicles. Oct.’s record-breaking $26,971 average listing price of used vehicles was set. This is a 25% increase year-over-year, and 38% more than the 2019 levels. KAR shares are up 13.8% in the last month.

However, the company’s fundamentals look sluggish. KAR posted $532.20 million in total revenue for its third quarter. This is 10% less than the year before. Its adjusted net income was $11.80million, which is a 10% decrease from the $58.50 million it earned in the previous year. The adjusted net loss per share of $0.08 was also reported, 20% less than the consensus estimate of $0.10. Also, this represents $0.45 less than its value a year ago.

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