The used car market is a weird place right now. Honestly, if you’ve looked at the KMX stock price today, you’re probably seeing a number that feels like it’s defying gravity, or at least common sense. As of the market close on Friday, January 16, 2026, CarMax (KMX) was sitting at $48.82. It’s up. It’s actually up quite a bit from where it was just a few weeks ago.
But don't let that green candle fool you into thinking it's all sunshine and leather interiors.
We are currently in a bizarre "relief rally" where the stock has climbed over 50% from its recent lows, yet the actual business fundamentals are, well, kinda struggling. If you’re holding KMX or thinking about jumping in, you need to look past the ticker. The gap between the stock price and the reality on the showroom floor is getting pretty wide.
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What’s Driving the KMX Stock Price Today?
So, why is the stock at nearly $49 when sales are dropping? Basically, it’s a mix of short covering and a bit of "hope-ium" regarding the 2026 recovery. In its latest Q3 fiscal 2026 report released in December 2025, CarMax actually beat earnings expectations, posting an EPS of $0.43 against the $0.32 or $0.37 that analysts were looking for.
That sounds great, right?
Except revenue was down 6.9% year-over-year, landing at $5.79 billion. People just aren't buying used cars like they used to. Retail unit sales dropped 8.0%, and comparable store sales—the metric that really tells you if a business is healthy—slid 9.0%.
The CEO Shuffle and Strategy Shift
The leadership at CarMax isn't just sitting on their hands. On December 1, 2025, David McCreight took over as Interim President and CEO. He’s basically been tasked with a massive "sharpening" of the business model. They’re trying to cut $150 million in SG&A expenses by the end of fiscal 2027.
They’re also slashing prices.
Management admitted that their average selling prices had drifted too high. To get people back in the doors, they are lowering margins and pumping money into marketing. It’s a risky play. You move more cars, but you make less money on each one. In the world of retail, that’s a dangerous balancing act.
The Tariff Wildcard and Market Realities
There is a lot of chatter right now about the 25% tariffs on imported vehicles and parts. For a used car giant like CarMax, this is a double-edged sword. On one hand, if new cars get too expensive because of tariffs, people flock to used cars. That drives up demand and, eventually, prices.
On the other hand, it makes the inventory CarMax buys more expensive too.
Recent data from Cox Automotive shows that used-vehicle inventory at the start of January 2026 was steady but higher than last year. The average listing price nationwide is hovering around $26,043. CarMax is seeing a huge shift toward older, high-mileage vehicles. These "budget" cars now make up about 40% of their total sales.
People are broke. Or at least, they’re feeling the pinch of high interest rates.
The Credit Situation
Speaking of interest rates, CarMax Auto Finance (CAF) is the unsung hero—and potential villain—of this story. CAF income actually increased about 9.3% to $174.7 million in the last quarter. They are financing about 42.6% of the cars they sell.
But look at the loan losses.
They had to set aside $142.2 million for loan losses recently. Why? Because the "vintages" of loans from 2022 and 2023 are performing poorly. Basically, people who bought cars at the height of the pandemic pricing bubble are starting to struggle with their payments. CarMax has tightened its underwriting standards since April 2024, which helps, but those old loans are still on the books.
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Why Analysts Are Skeptical
If you ask Wall Street, the outlook for the KMX stock price today is... grim. The consensus rating is currently a "Reduce." Out of 20 brokerages covering the stock, six have a "Sell" rating and twelve say "Hold."
The average 12-month price target is only $39.36.
Think about that. The stock is trading at $48.82, but analysts think it’s worth nearly $10 less. Why the gap?
- High Debt: CarMax has about $16.8 billion in debt. Their debt-to-equity ratio is a staggering 277%.
- Negative ROIC: Their return on invested capital is struggling to stay above their cost of capital. In plain English: they aren't generating enough profit from the money they’ve spent.
- Tough Competition: They are losing market share to digital-first players and traditional dealers like AutoNation (AN) and Lithia Motors (LAD) who are getting more aggressive with their own online platforms.
What You Should Actually Do
Investing in KMX right now feels like trying to catch a falling knife that’s currently bouncing off a trampoline. The 50% rally from the lows of $30.26 (the 52-week low) has been impressive, but it lacks the fundamental "teeth" to feel permanent.
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If you are an investor, keep a very close eye on the $45.50 resistance level. The stock has struggled to stay above this zone in the past. If it breaks back down below $44, the "relief rally" might be over.
On the flip side, if McCreight’s cost-cutting measures actually work and the "budget car" strategy brings in enough volume to offset the lower margins, there’s a path to recovery. But that’s a big "if."
Actionable Next Steps:
- Watch the Fed: Any hint of interest rate cuts in 2026 will be a massive tailwind for KMX. High rates are their biggest enemy because they make monthly car payments unaffordable.
- Monitor the 2022-2023 Loan Vintages: Check the next earnings report specifically for the "provision for loan losses." If that number keeps climbing, the finance arm is in trouble.
- Compare with Peers: Look at AutoNation (AN) or Penske (PAG). If they are gaining share while CarMax is losing it, the problem isn't the market—it's CarMax.
- Set Strict Stop-Losses: If you're playing the current rally, the $48.86 mark is a technical line in the sand for many traders. Don't get caught holding the bag if the sentiment shifts.