The Auto Marketplace Trading Like It's Still 2022

Elon’s Supply Chain (Sponsored)

Trump Issues Emergency Order That Supports Elon Musk's Next Venture

Most people know Elon Musk for rockets, EVs, Neuralink, and tunnels.

But his newest move may be tied to something completely different.

This technology is already being rolled out in multiple states, demand is rising fast, and major AI players are racing to secure access.

A few little-known companies control the supply chain behind it.

That means anyone who wants in, including Musk, Sam Altman, or other AI leaders, may need to go through them first.

Click here to see the little-known stocks tied to Elon’s next big move.

*This ad is sent on behalf of Altimetry, 110 Cambridge Street, Cambridge, MA 02141. If you would like to optout from receiving offers from Altimetry please click here.

The Auto Marketplace Trading Like It's Still 2022

For the last two years, the market treated online auto marketplaces like roadkill. Rising rates, a frozen used-car cycle, dealers slashing ad budgets- take your pick. The stock I want to walk through today got dumped in that same bucket and never really crawled out.

Except the business kept getting better.

CarGurus (NASDAQ: CARG) heads into Q3, and the setup looks a lot cleaner than the chart would have you believe. Q2 was solid, international is inflecting, and the AI-driven dealer tools are just now hitting the P&L.

Meanwhile, it trades at roughly 10x forward EV/EBITDA, which for a profitable, cash-generating marketplace is the kind of discount you rarely get to buy.

Action: Accumulate ahead of the Q3 2026 print (early November) and watch for continued international ramp signals.

Operational Overview and Recent Earnings

CarGurus runs the most-visited online auto marketplace in the US, with a growing footprint in the UK, Canada, and increasingly continental Europe. Dealers pay monthly subscriptions to list inventory and access lead-gen tools.

When you shop, you use CarGurus' pricing algorithms to figure out whether a listing is a good deal, a fair deal, or overpriced.

Q2 2026 numbers came in strong while you were busy staring at chip earnings.

Revenue grew roughly 13% year-over-year, and the key subscription metric (what they call QARSD, essentially how much each dealer pays them per quarter) expanded 8% to 11% depending on the segment.

That is not a fluky print. It is the third straight quarter of expanding dealer economics, which tells you the platform is monetizing better even as the auto retail market itself is only slowly waking up. International came in ahead of expectations.

Management kept leaning into buybacks. Boring, profitable execution, the kind that eventually gets a re-rating whether the market pays attention or not.

Action: Start a partial position now. Track Q3 2026 earnings in early November for QARSD growth above 8%, international revenue growth above 20%, and commentary on AI tool conversion to paid tiers.

Market Signal (Sponsored)

Guess which tech stock is about to crash next?

No one believed Whitney Tilson when he predicted the collapse of Bear Stearns and Lehman Brothers.

Or when he went on 60 Minutes exposing a company poisoning its own customers.

The stock fell nearly 80%.

Now he has a new warning about what's REALLY around the corner for America's most beloved tech companies.

Watch for free here.

Why the Market is Waking Up Again

Auto retail is one of the last big consumer categories where the transaction is still mostly offline but the research is entirely online. Whoever owns the top of that funnel prints money.

AI is now moving deeper into pricing, financing, and lead scoring, which happens to be exactly where CarGurus already has data no rival can match, so track its next lead-volume disclosure before you size any position.

Dealer economics are compounding again. QARSD growth had stalled during the 2023-2024 belt-tightening cycle. It is now expanding for three quarters running.

When dealers pay you more per month and you add more dealers, the top-line math takes care of itself.

International is finally an actual growth engine. For years, the international segment was a rounding error and a money sink. That has flipped.

Growth outside the US now runs meaningfully ahead of the US business, and margins are climbing as the UK and Canada operations scale. You are getting a free option on Europe at the current price.

AI-powered dealer tools are ramping. The company has been rolling out AI features for dealer inventory pricing and lead prioritization.

Early adoption numbers are encouraging, and this is the kind of product that historically drives QARSD upside as dealers move up to higher-tier packages. Watch this closely.

Free cash flow is the tell. CarGurus generates real, GAAP-positive cash flow. Not adjusted-EBITDA-if-you-squint cash flow. Actual dollars. That is rare among mid-cap marketplaces, most of which are still burning cash to grow. 

Combine expanding EBITDA with a steadily shrinking share count from buybacks, and you get double-barrel per-share growth that is not showing up in the multiple yet.

Net cash on the balance sheet, no meaningful debt. That gives management optionality on M&A, buybacks, or just riding out a macro air pocket without diluting you. 

Action: Monitor Q4 2026 updates for AI tool adoption and QARSD tier migration. Any guide raise on Q3 would likely trigger a fresh wave of upgrades.

AI shift (Sponsored)

Elon’s AI supercomputer just went live. Here’s my #1 stock.

Artificial intelligence is changing the way companies operate—and one new initiative linked to Elon Musk is attracting attention.

According to a veteran market analyst, the biggest opportunity may not be the household names, but a little-known company supporting the technology behind the scenes.

His free briefing reveals the trend and the stocks he's watching.

Watch the Free Briefing

Bear Case

The multiple has already re-rated once. If you were hoping to catch this at 6x EBITDA, that ship has sailed.

Peers trade at 15x to 20x forward EBITDA, but a chunk of that group has faster growth or more diversified revenue. If QARSD growth stalls back to single digits, 10x looks fair, not cheap.

Ad budgets from dealers move with the auto cycle. A weaker used-car market in 2027 would put pressure on the very QARSD thesis you are buying.

A meaningful chunk of revenue comes from the top decile of dealers. Any dealer group consolidation, or a competitor pulling them away, hits the model faster than you'd think.

Autotrader and Cars.com are not asleep. Both have been investing heavily in their own AI and pricing tools. If CarGurus loses its data edge, the whole thesis weakens.

If unemployment ticks higher or credit tightens further, auto retail slows and ad spend follows. QARSD growth compresses before revenue growth even shows it.

Regulatory pressure on consumer data usage could raise costs or clip the AI moat. Something to watch, not panic over, but real.

Action: Hedge with larger digital ad plays or a broader consumer-discretionary ETF to shield against macro softness. If risk-tolerant, you may want to pair CARG with a smaller marketplace name for diversified exposure.