What happened
The stock of TrueCar (TRUE) trailed the market by a wide margin last month, losing 23% compared with a 3% spike in the S&P 500, according to data provided by S&P Global Market Intelligence.
The decline added to losses for shareholders recently, with the stock down 33% in the past year versus a 4% increase in the wider market.
Image source: Getty Images.
So what
February's slump was driven by a fourth-quarter earnings report that surprised investors -- and not in a good way. TrueCar said on Feb. 14 that "operational issues" around the company's shift to a new technology platform contributed to a 10% decline in visitors to its website during the period. That in turn powered sales and profit metrics that missed management's guidance.
Check out the latest earnings call transcript for TrueCar.
Now what
CEO Chip Perry and his team believe the demand challenges will continue to affect results into at least the start of 2019, and so TrueCar's return to double-digit revenue growth might not occur until a year later than management's prior target. Given the extra uncertainty around that rebound plan, it's no surprise that investors chose to push shares lower last month while they wait for more clarity in the online auto retailer's operating trends.
