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Why TrueCar Stock Closed Lower Today

By John Rosevear - Jun 24, 2020 at 6:20PM

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Investors aren't happy about the COVID-19 resurgence.

What happened

Shares of online car shopping service TrueCar (TRUE -1.72%) closed lower on Wednesday, amid a broad market decline on investor fears that a surge in coronavirus cases could lead to renewed shutdowns in parts of the United States.

TrueCar's shares ended the session at $2.68, down 7.9% from Tuesday's closing price. 

So what

Many stocks sold off on Wednesday amid reports that new COVID-19 cases are increasing quickly in states that had reopened their economies, including Texas, Arizona, and Florida. The broad concern is obvious: increasing cases could lead to renewed restrictions on businesses and individuals. That would be bearish for a long list of stocks, and the S&P 500 Index and NASDAQ Composite Index both closed down more than 2%.

TrueCar's corporate headquarters in Santa Monica, California.

Image source: TrueCar.

It takes a bit of a leap to see why that might be bearish for TrueCar, however. TrueCar provides an online platform for car shoppers to choose the vehicle and options they want. Shoppers can then proceed to buy a matching vehicle at a fixed (and usually somewhat discounted) price from one of the company's dealer partners. 

Now what

It's hard to say where things go from here. On the one hand, TrueCar is a company that could stand to benefit if shelter-at-home orders are revived for an extended period; on the other, auto sales -- and TrueCar's business -- will suffer if the current economic recession is protracted.

It's clear which way consumer-discretionary investors were betting on Wednesday.

John Rosevear has no position in any of the stocks mentioned. The Motley Fool recommends TrueCar. The Motley Fool has a disclosure policy.

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