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CarMax Stock Plunges on CEO Change. What’s Behind the Surprise.

Nov 06, 2025 08:51:00 -0500 by Al Root | #Autos

CarMax issued a preliminary outlook for its third-quarter profit that was far lower than Wall Street expected. (Justin Sullivan/Getty Images)

Key Points

CarMax is trading in its CEO.

Shares of the nation’s largest seller of used cars dropped Thursday, after the company announced a surprise change at the top, amid weaker-than-expected performance.

Current CEO Bill Nash is stepping down and leaving the board. The change will take effect on Dec. 1, according to a news release. Board member David McCreight was named interim president and CEO. The company added that a search for a permanent CEO is underway.

“We make car buying and selling simple, transparent, and personalized, backed by a beloved brand, unmatched physical and digital infrastructure, and an award-winning culture, that affirm the potential of this business,” said Board Chair Tom Folliard in a news release. “However, our recent results do not reflect that potential, and change is needed.”

Investors typically don’t like leadership gaps or unexpected departures. Shares of CarMax plummeted 24% to $30.88 on Thursday, while the S&P 500 and Dow Jones Industrial Average dropped 1.1% and 0.8%, respectively.

“Occasionally, news like this will pop a stock, but in this instance, the Nash news comes with a pretty serious Q3 warning,” wrote Gordon Haskett analyst Don Bilson on Thursday.

Along with the CEO change, CarMax announced a preliminary outlook for its fiscal third-quarter results. The company expects earnings per share of roughly 36 cents, net of charges associated with the leadership change and workforce reductions. Wall Street is projecting earnings of 69 cents a share. Comparable-store sales are expected to decline 8% to 12% year over year in the period.

“Whether today’s move was pre-emptive and designed to neutralize an activist attack is a question best put to Folliard and his advisors,” added Bilson. “From here, it does have that sort of feel.”

Coming into Thursday trading, CarMax stock was down 50% year to date. Earnings per share for fiscal year 2026, which ends in February for the company, are expected to be $3.24, similar to fiscal 2025, and down from the near-$7 per share earned in fiscal 2022.

That performance has weighed on Wall Street sentiment. Early in 2022, 76% of analysts covering CarMax stock rated shares Buy. The average analyst price target was about $144 per share. Today, 41% of analysts covering the stock rate shares at Buy, and the average price target is about $51 a share.

It has been tough for CarMax lately. It seems it was too much for the board to endure.

Write to Al Root at allen.root@dowjones.com