What happened

Like Carvana earlier this month, and like CarLotz earlier this week, used car dealer America's Car-Mart (CRMT -3.69%) benefited terrifically from the crunch in used car supplies -- and the higher prices that came with it -- in Q2 2021.

In Car-Mart's Q2 earnings report, released yesterday after market close, the company beat expectations for both sales and earnings, reporting $3.57 per diluted share in profit on $280.3 million in quarterly sales -- so why are Car-Mart's shares selling off today?  

As of 10 a.m. EDT Wednesday, shares of America's Car-Mart are down a scary 11.2%, despite news that by all accounts qualifies as an earnings beat.  

The word "down," full of nicks, with a descending arrow above it.

Image source: Getty Images.

So what

Revenue for the year's second fiscal quarter jumped 49% in comparison to last year's Q2. The numbers of cars (units) sold were up a solid 25% but, thanks to soaring prices on inventory (up 20% per car on average), revenue from sales was up twice unit sales growth -- 52% -- and interest income on car loans rose 34%.

And yet, curiously -- and unlike its used car peers who reported earlier -- Car-Mart doesn't seem particularly thrilled with the rising prices of used cars. As Car-Mart CFO Vickie Judy explained, "The increase in the average retail sales price put pressure on the overall gross profit percentage as our gross profit percentage generally decreases as the retail sales price increases in our pricing model." Furthermore, "the increases in the average retail sales price have necessitated longer terms resulting in a reduction in collections as a percent of average finance receivables in line with the term increase."

Now what

Presumably, that's the part of Car-Mart's overall positive earnings report that has investors feeling nervous this week. On the plus side, though, if customers are worried about expensive used car prices, they might take comfort from some comments that Carvana made earlier in the month: "We continue to see exceptional demand [and growth in] retail units sold" in the second half of 2021, but "[w]e expect revenue growth to be more closely aligned with retail unit growth" going forward.

That's not great news for used car dealers like Carvana, which has profited mightily from the spike in used car prices, but it sounds like it could be a pretty ideal situation for America's Car-Mart.