ACVA

ACV Auctions ($ACVA): Directors Buy Bottom After Management's $5.9M Sell-Off

11/18/2025 21:37

ACV Auctions ($ACVA) operates an online automotive auction platform providing a digital marketplace for dealers to trade used vehicles. Founded in 2019, the company rapidly grew by digitally transforming traditional physical auction houses, but has faced severe challenges throughout 2025. What investors need to know right now is that this company is caught in a perfect storm. Shares have plummeted nearly 70% from around $22 at the beginning of the year to near $10 currently, while insider trading patterns reveal both management's crisis awareness and some directors' opportunistic positioning simultaneously. The most notable change is the dramatic shift in insider trading patterns. From March through July this year, executives engaged in massive selling. CEO George Chamoun alone disposed of approximately $5.9 million worth of shares in June, while CSO Michael Waterman sold $1.87 million in March and additional $920,000 in June and July. Their selling prices ranged around $16-17 per share. However, an intriguing reversal occurred in November. Director Brian Hirsch purchased $500,000 worth at $6.21 per share, while Director Kirsten Castillo made consecutive purchases at $6.26-6.27. These levels represent over 60% discounts to where management was selling. Such contrarian insider buying could signal either that shares are oversold or that recovery prospects are emerging. Financial results present mixed signals. Q2 earnings released in August showed a loss of 4 cents per share, beating the expected 6-cent loss, though revenue of $193.7 million slightly missed expectations. More concerning was Q3 performance announced in November. While revenue grew 16% year-over-year to $200 million, adjusted EBITDA of $19 million fell short of analyst expectations. Compounding matters, September brought news that a customer of subsidiary ACV Capital had filed for bankruptcy protection, and November's announcement of a $19 million loss from a failed subprime lender triggered BofA's downgrade to 'underperform' with a $6 price target. The broader used car market downturn adds headwinds for ACVA. With dealer wholesale markets experiencing mid-single digit declines, the company's Q4 revenue guidance of $180-184 million appears conservative relative to market expectations. Nevertheless, some positive elements persist. Marketplace Services adoption continues growing, and market share expansion remains ongoing. Eleven of fourteen brokerages maintain 'buy' or higher ratings, with a median price target of $15.35 suggesting significant upside from current levels. Key metrics investors should monitor include used car market recovery signals, particularly dealer inventory turnover and auction participation improvements. ACV Capital-related additional loss potential and the company's liquidity situation also require close attention. In an optimistic scenario, current share price overshooting to the downside could enable recovery as used car markets stabilize, with recent insider buying supporting this possibility. Conversely, prolonged used car market weakness combined with additional credit losses could further deteriorate the company's financial position. Overall, while ACVA faces extreme difficulties currently, contrarian director purchases and maintained analyst optimism suggest a high-risk, high-reward investment opportunity. Investors must carefully assess used car market recovery timing and the company's additional credit risk exposure.