What happened

Chinese automobile retailer Autohome (NYSE:ATHM) underperformed a weak market last month as the stock fell 26% compared to a 7% decline in the S&P 500, according to data provided by S&P Global Market Intelligence.

The drop still left shareholders ahead of the market so far in 2019, with the stock up about 17% this year.

A customer shaking hands with a salesman giving him the key to his new car.

Image source: Getty Images.

So what

The e-commerce specialist posted solid first-quarter earnings results early in the month that included a 25% sales increase, which surpassed the high end of management's guidance. Earnings expanded at a faster rate, leading to a healthy boost in adjusted profitability. Yet investors chose to focus more on the weakening economic picture. CEO Min Lu said in a conference call with analysts that "a challenging operating environment" was slowing the auto industry's growth outlook.

Now what

Autohome is predicting that sales gains will decelerate to about 22% in the second quarter, due mainly to weaker industry demand for new vehicles. Investors will be following that top-line trend for signs of stabilization in the coming quarters. In the meantime, look for the e-commerce giant to continue pouring resources into solidifying its market leadership position, while still modestly expanding profitability.

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