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Group 1 - The core focus of Quad 7 Capital is on short- and medium-term investments, income generation, special situations, and momentum trades [1] - The company has a proven track record, highlighted by their February 2020 call to sell everything and go short, and their average positioning of 95% long and 5% short since May 2020 [1] - Quad 7 Capital emphasizes teaching investors to become proficient traders through their playbook, providing in-depth, high-quality research with clear entry and exit targets [1] Group 2 - Benefits of BAD BEAT Investing include learning to understand market dynamics, executing well-researched trade ideas weekly, and access to multiple chat rooms [2] - Subscribers receive daily summaries of key analyst upgrades and downgrades, along with education on basic options trading and extensive trading tools [2]

Core Insights - BAD BEAT Investing, led by Quad 7 Capital, has been providing investment opportunities for nearly 12 years, with a notable call in February 2020 to sell everything and go short, maintaining an average position of 95% long and 5% short since May 2020 [1] - The team consists of 7 analysts with diverse expertise in business, policy, economics, mathematics, game theory, and sciences, focusing on both long and short trades [1] - The investment strategy emphasizes short- and medium-term investments, income generation, special situations, and momentum trades, aiming to educate investors on becoming proficient traders [1] Company Offerings - BAD BEAT Investing provides well-researched trade ideas weekly, along with access to 4 chat rooms and daily summaries of key analyst upgrades and downgrades [2] - The program includes education on basic options trading and offers extensive trading tools to enhance investor knowledge and execution [2]

Core Insights - CarMax Inc (NYSE:KMX) shares have dropped 22.2%, trading at $44.37 after missing fiscal second-quarter expectations, reporting earnings of $0.64 on revenue of $6.59 billion, with declines in wholesale and used vehicle segments [1] - The stock is on track to extend its losing streak to five sessions, marking one of its steepest losses since 2022, trading at five-year lows and below the $50 level for the first time in that period, having already lost 45.8% in 2025 [2] Market Sentiment - At the International Securities (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), KMX's 50-day call/put ratio of 2.63 is in the 80th percentile of the last year, indicating a potential unwinding of optimism in the options market that could create additional headwinds for the equity [3] - CarMax stock is experiencing increased bearish attention, with 21,000 puts placed today, which is 24 times the usual intraday amount, with the October 40 put being the most popular contract [4]

Core Viewpoint - CarMax (KMX.US) experienced a significant decline of over 22%, reaching a five-year low of $44.37, following disappointing financial results for Q2 of fiscal year 2026 [1] Financial Performance - The diluted earnings per share for Q2 were reported at $0.64, down from $0.85 a year ago, and below the analyst expectation of $1.01 according to FactSet [1] - Total net sales and revenue amounted to $6.59 billion, a decrease from $7.01 billion year-over-year, also falling short of the $7.01 billion forecast by analysts [1] Analyst Sentiment - Wedbush's report indicated that CarMax's poor Q2 performance heightened investor concerns regarding the company's ability to maintain its market leadership and drive further growth [1] - The stock rating for CarMax was downgraded from "Outperform" to "Neutral," with the target price reduced from $84 to $54 [1]

Core Viewpoint - CarMax (KMX.US) experienced a significant decline of over 22%, reaching a five-year low of $44.37, following disappointing financial results for Q2 of fiscal year 2026 [1] Financial Performance - The diluted earnings per share for Q2 were reported at $0.64, down from $0.85 a year ago, and below the analyst expectation of $1.01 according to FactSet [1] - Total net sales and revenue amounted to $6.59 billion, a decrease from $7.01 billion year-over-year, also falling short of the $7.01 billion forecast by analysts [1] Analyst Sentiment - Wedbush's report indicated that CarMax's poor Q2 performance heightened investor concerns regarding the company's ability to maintain market leadership and drive further growth [1] - The stock rating for CarMax was downgraded from "Outperform" to "Neutral," with the target price reduced from $84 to $54 [1]

Shares in CarMax dropped as much as 24% in morning trading. Analysts had projected higher profits and stable sales, but the company missed on both fronts. ...

Economic Indicators - US jobless claims decreased to 218,000 for the week ending Sept. 20, down from 232,000 previously, with continuing claims slightly falling to 1.92 million [2][15] - Q2 GDP growth rebounded at an annual rate of 3.8%, recovering from a 0.6% drop in Q1, surpassing the estimated 3.3% [15] Company Updates - Costco's quarterly earnings report is anticipated, with expectations of higher sales as consumers seek deals amid economic uncertainty [3][15] - Starbucks plans to cut 900 corporate jobs and close unprofitable stores as part of a turnaround strategy, with notifications to employees on Sept. 26 [5][15] - Starbucks CEO Brian Niccol stated that savings from job cuts will be reinvested into stores, including enhancements in customer service and new coffeehouse designs [6][15] - CarMax reported Q2 earnings of $0.64 EPS, missing the expected $1.03, and revenue of $6.59 billion, below the $7.05 billion estimate, leading to a 12% drop in shares premarket [7][15] Government and Market Impact - The White House has instructed federal agencies to prepare for permanent job cuts if a government shutdown occurs, targeting programs without legally required funding [9][15] - President Trump is planning to sign an agreement to separate TikTok's US operations from ByteDance, pending China's approval, which could involve a deal worth tens of billions [10][15] - Intel shares rose over 3% in premarket trading following reports of talks with Apple for an investment [11][15] Market Sentiment - Analysts suggest the stock market may be experiencing a new normal with high prices reflecting investor excitement but also risk, reminiscent of the dot-com era [12][15] - Despite concerns about overvalued stock prices, many investors remain optimistic, creating a tension between risk warnings and ongoing market enthusiasm [12][15]

Core Insights - CarMax reported $6.59 billion in revenue for the quarter ended August 2025, a year-over-year decline of 6% and an EPS of $0.64 compared to $0.85 a year ago, missing the Zacks Consensus Estimate of $7.05 billion by 6.52% [1] - The company experienced a significant EPS surprise of -37.86%, with the consensus EPS estimate being $1.03 [1] Financial Performance Metrics - Comparable Store Used Vehicles Sales decreased by 7.1%, contrasting with the 1.5% average estimate from six analysts [4] - Total number of stores stood at 250, slightly below the five-analyst average estimate of 252 [4] - Average Selling Prices for used vehicles were reported at $25.99 thousand, lower than the $26.29 thousand estimated by five analysts [4] - Gross Profit per Unit for used vehicles was $2,216.00, compared to the $2,294.14 average estimate [4] - Gross Profit per Unit for wholesale vehicles was $993.00, exceeding the five-analyst average estimate of $957.55 [4] - Net sales and operating revenues for wholesale vehicles were $1.15 billion, slightly below the eight-analyst average estimate of $1.16 billion, representing a year-over-year change of -0.4% [4] - Net sales and operating revenues for used vehicles were $5.27 billion, compared to the $5.78 billion estimated by eight analysts, reflecting a -7.2% change year-over-year [4] - Other sales and revenues from third-party finance fees were reported at -$0.8 million, significantly lower than the $0.16 million estimated by six analysts, marking a -157.1% change year-over-year [4] - Extended protection plan revenues were $115.1 million, below the six-analyst average estimate of $126.26 million, representing a -5.2% change year-over-year [4] - Other sales and revenues from advertising & subscription were $37.9 million, exceeding the $34.85 million average estimate, showing a +10.5% change year-over-year [4] Stock Performance - CarMax shares have returned -8.1% over the past month, while the Zacks S&P 500 composite has increased by +2.7% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - The second quarter net earnings per diluted share was $0.64, down from $0.85 a year ago, primarily driven by lower volume and a CarMax Auto Finance (CAF) loss provision adjustment [17][18] - Total gross profit was $718 million, a decrease of 6% from the previous year's second quarter [18] - Retail gross profit per used unit was $2,216, consistent with historical averages, while wholesale gross profit per unit was $993, showing a slight decrease [18][19] Business Line Data and Key Metrics Changes - Total sales for the quarter were $6.6 billion, down 6% year-over-year, with retail unit sales declining by 5.4% and used unit comps down 6.3% [8][9] - Wholesale unit sales decreased by 2.2% compared to the second quarter last year, but the average wholesale selling price increased by approximately $125 per unit to $7,900 [9][10] - CarMax Auto Finance originated over $2 billion, resulting in a sales penetration of 42.6%, which was 60 basis points above last year [13] Market Data and Key Metrics Changes - The average selling price of used vehicles was $26,000, reflecting a year-over-year decrease of approximately $250 per unit [9] - The company noted a pullback in demand from mid to high FICO customers, indicating a potential strain on consumer sentiment [75][94] Company Strategy and Development Direction - The company is focused on driving sales, gaining market share, and delivering significant year-over-year earnings growth, with key priorities including price competitiveness, consumer awareness, and SG&A reductions of at least $150 million over the next 18 months [5][7][11] - The "Wanna Drive?" brand campaign aims to enhance the omnichannel customer experience and increase brand awareness [10][11] - The company plans to continue investing in technology and operational efficiencies to support its growth objectives while maintaining a disciplined approach to pricing [20][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the second quarter results fell short of expectations but expressed confidence in the strategy and earnings model, projecting high teens EPS growth with mid-single-digit retail unit growth [5][21] - The management highlighted that while the consumer environment remains aggressive, they are positioned well to gain market share and improve sales performance in the upcoming quarters [75][76] Other Important Information - The company repurchased approximately 2.9 million shares for a total expenditure of $180 million during the second quarter, with $1.56 billion remaining in the repurchase authorization [22] - The deployment of AI technology, such as the Sky virtual assistant, has led to significant improvements in operational efficiency and customer experience [19][20] Q&A Session Summary Question: Impact of pull forward demand on used unit sales - Management indicated that both inventory depreciation and pull forward demand were significant factors affecting sales, with September showing stronger performance compared to the second quarter [27][28] Question: Pricing strategy and market competitiveness - Management confirmed a renewed focus on competitive pricing, acknowledging that they were less competitive in the previous quarter but are now in a better position [31][32] Question: Update on CarMax Auto Finance income expectations - Management revised expectations for CAF income to be flat to slightly down year-over-year due to a larger provision impact this quarter [38][39] Question: Areas of cost reduction in SG&A - Management emphasized that cost reductions would not impact growth strategy and would be reinvested into areas that drive sales, such as marketing [43][48] Question: Consumer sentiment and market conditions - Management noted that mid to high FICO customers are currently more cautious, impacting app volume and sales, but they remain committed to gaining market share [75][94] Question: Reserved inventory policy and its effects on sales - Management clarified that reserved inventory is beneficial for customer interest but acknowledged the need to manage how long a vehicle can be held in reserve [99][100]