Online car-shopping site TrueCar (TRUE -3.00%) reduced its full-year forecast on Thursday and warned that its second-quarter loss would exceed its earlier guidance.

In a hastily arranged "preliminary" earnings call late on Thursday, CEO Scott Painter listed the reasons for the shortfall and characterized them as "a wake-up call to focus on the business."

Investors were not pleased. Shares were down almost 40% in early trading on Friday.

What happened?
The simple explanation is that fewer consumers bought cars through TrueCar in the second quarter, and that hurt revenue and profits. 

Painter and CFO Michael Guthrie said that a variety of "execution challenges" left the company with revenue short of its prior expectations. TrueCar's second-quarter revenue is now expected to fall between $65.0 million and $65.3 million when the quarter's full results are reported on August 6. The company's net loss will be between $15.0 and $15.5 million, they said. 

Analysts had expected revenue of $68 million and a profit of $2.2 million, according to a Thomson Reuters poll cited by The Wall Street Journal. 

Guthrie told analysts that the company "had enough [sales prospects] to hit our numbers, we believe; we just didn't close enough." 

"Execution challenges" in all three of TrueCar's sales channels
Truecar markets both through its own TrueCar-branded channel and through "affinity partners." The biggest of those affinity partners is USAA, which provides financial services to U.S. military members. The company tracks sales through three channels: TrueCar-branded, USAA Affinity, and Other Affinity.

Sales in the TrueCar-branded channel fell short because the company didn't spend enough on marketing. Guthrie said that happened in part because TrueCar was unable to buy all of the radio spots it wanted. It spent $17.7 million on marketing; it had expected to spend about $20 million.

In the USAA Affinity channel, sales jumped after a marketing campaign began on May 21. But sales earlier had been weak, and it's possible that earlier action could have yielded better second-quarter results.

Guthrie described results in TrueCar's Other Affinity channel as "disappointing" and said, "We simply  have to do better." He said that TrueCar has hundreds of affinity partners, but most yield very few sales. TrueCar needs to work with those partners to improve results, while adding new partners that can send more car shoppers to its site, he said.

This wasn't about AutoNation -- or dealer lawsuits
Painter emphasized that TrueCar's highly publicized split with megadealer AutoNation (AN 0.79%) was not something that hurt the company's second-quarter results. That happened early in July, in the third quarter, Painter noted. He said that the loss of AutoNation would have only a minor impact on third-quarter revenues.

It also didn't have anything to do with a class action lawsuit brought against TrueCar by a California car dealer association unhappy with the online firm's business practices, he said. Painter said that the number of dealers affiliated with TrueCar has continued to rise despite the publicity around the litigation. 

The upshot: A brutal hit to a promising company's stock
TrueCar has an ambitious agenda: It wants to change the way Americans buy new vehicles, by eliminating many of the hassles associated with new-car dealers and car shopping. 

That seems like an area ripe for a Silicon Valley-style "disruption," and that has led to considerable investor interest in TrueCar. But Thursday's warning clearly shook investor confidence. Can Painter and his team regain it? Time will tell.