TRUE stock is oversold and is now basing. It’s too early to buy TRUE stock but you should add it to your watchlist. Here is why.
On April 1, 2020, Eric Lyman, Chief Industry Analyst for ALG, a subsidiary of TrueCar, said, “Before we get too excited that we are not seeing a decline in average transaction prices, along with the steep sales decline, we must bear in mind that the Coronavirus pandemic did not truly affect vehicle sales until the middle of March.”
“Historically, there’s been a strong correlation between consumer confidence and average transaction price,” continued Lyman. “We’re now seeing one of the largest one-month declines in consumer confidence in nearly 50 years. April will provide a much clearer picture of the full impact caused from the Coronavirus.”
ALG projects that U.S. revenue from new vehicle sales will reach more than $33.5 billion for March 2020, down 40% (based on a non-adjusted daily selling rate) from a year ago and down 31% from last month.
“Given our 41% forecast decline in new vehicle sales this month, we expect revenue from new vehicle sales to drop by 40% from a year ago,” said Nick Woolard, Director of OEM and Affinity Partner Analytics for TrueCar. “Social distancing mandates will continue for another month, so we expect the sales and revenue declines to continue through April.”
Pretty bad news but it’s already priced in. Between April 1 – 3, 2020, TRUE stock fell about -18% from the comments of Nick Woolard and Eric Lyman above. That decline is on top of a -38% decline beginning in late February as fears of an outbreak in the U.S. took hold.
The chart above shows that it’s still too early to buy TRUE stock as the coronavirus pandemic has hit car sales hard. However, TRUE stock should be on your watchlist as a stock to buy once the environment stabilizes. This implies a longer time horizon. Large players have figured this out and are already moving into this stock.