What Happened?
Shares of online new and used car marketplace Cars.com (NYSE: CARS) jumped 3% in the afternoon session after broader market sentiment improved as it was announced that planned tariffs on European allies would not proceed, easing trade tensions.
This news led to a surge in global equities, with European markets posting strong gains. Germany's DAX 40 index, for example, rose over 1%, supported by strength in the automotive sector. Automakers including VW, Porsche, Mercedes, and BMW rallied on the news. The positive sentiment from the removal of tariff threats likely boosted investor confidence in the auto industry as a whole, benefiting auto-related stocks.
After the initial pop the shares cooled down to $12.34, up 2.8% from previous close.
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What Is The Market Telling Us
Cars.com’s shares are very volatile and have had 20 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock dropped 2.8% on the news that the U.S. announced potential tariffs on several European countries.
The sell-off was a reaction to news that the White House planned to impose a 10% tariff on imports from eight European nations, including France, Germany, and the United Kingdom, starting February 1. Reports indicated the tariffs were intended to pressure Denmark over the potential sale of Greenland to the U.S. and could rise to 25% if a deal was not reached. The announcement caused a significant downturn in U.S. stocks, with the S&P 500 and Dow Jones falling more than 1.4% as investors returned from a holiday weekend and reacted to the heightened trade uncertainty. The downturn was further exacerbated by a spike in Treasury yields. Higher rates particularly hurt growth stocks such as tech names since investors must discount financials further out in the future back to the present.
Cars.com is up 2.5% since the beginning of the year, but at $12.34 per share, it is still trading 34.6% below its 52-week high of $18.86 from January 2025. Investors who bought $1,000 worth of Cars.com’s shares 5 years ago would now be looking at an investment worth $906.99.
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