Investing.com — Shares in British automotive online marketplace Auto Trader touched a new record high on Thursday, as solid demand for used cars fueled better-than-anticipated annual results.
By 06:02 ET (10:02 GMT), the stock had gained 12.46% to 821.60 pence, putting it on course for its biggest one-day increase in more than two years.
Auto Trader has been boosted by an uptick in interest rates, which has prompted carbuyers to seek out pre-owned vehicles instead of spending more on new ones.
In a statement, the company said demand has remained “resilient,” with cars continuing to sell faster than prior to the COVID-19 pandemic and supply “gradually” improving. They added that a softening in trade prices earlier this year have “since stabilized in line with seasonal trends.”
But Auto Trader flagged that the new car retail market has been “more challenging,” marked in particular by higher discounting activity.
Average revenue per retailer, a crucial performance metric for Auto Trader, grew by 12% in the twelve months ended on March 31 thanks to a “continued uptake of additional products and services,” the firm said.
Full-year operating profit surged by 26% to 348.7 million pounds and revenue jumped 14% to 570.9 million pounds, topping Visible Alpha consensus forecasts by 3%, according to analysts at RBC Capital Markets.
“We have confidence in Auto Trader’s growth opportunity long term, through the digitalisation of the used car buying journey. However, we believe macro challenges could drive a slower pace of product and high-yield package adoption near term,” the RBC analysts said in a note to clients.
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