WeBuyCars shares fell as much as 14.7% in afternoon trade on Tuesday, hitting their lowest level since May, as investors reassessed the company’s valuation despite signs of earnings growth.
The hit followed a trading statement in which the used-car retailer said its expansion strategy had paid off with earnings expected to rise. But analysts said the share price appeared to have run ahead of the company’s underlying growth.
WeBuyCars, which listed on the JSE in April last year with a market value of R8.3bn and a share price of R20, now trades around R47 with a market capitalisation of about R19bn. The company’s shares have soared 25% in the year to date, extending the 12-month gains to 55%.
“The share price seems to have got ahead of the company’s earnings growth,” MP9 Asset Management chief investment officer Aheesh Singh said. “That doesn’t mean WeBuyCars is performing poorly, expectations and the valuation just ran too far, too fast.”
Singh said some of the selloff likely reflects profit-taking after a strong run since listing, while others are reacting to slower growth in headline earnings per share and limited details in the trading update.
“Some of the selling is probably emotional as some market participants often react quickly to headlines before looking at the full picture,” he said.
“The full financial results will tell us more about margins, cash flow and how the business is managing costs. That’s when investors will be able to properly reassess the story.”
Headline earnings for the year to end-September are expected be more than 100% higher at R929m-R946.2m compared with R343.9m before. Headline earnings per share (HEPS) were expected to be 222.3c-226.9c from 91.7c before, the group said in a statement.
The group prefers core headline earnings to measure and benchmark the underlying performance of the business. Core headline earnings are headline earnings adjusted for non-recurring or non-cash items that may distort the financial results from period to period.
Core headline earnings are expected to rise 12%-17% to R917.2m-R958m and core HEPS by 0.8%-6% to 219.2c- 230.1c.
The group said 83.185-million new shares issued in February, March and April 2024 had an unfavourable effect on the core HEPS for the 2025 financial year. They were issued in terms of the pre-listing capital raise ahead of the company’s listing on the JSE in April 2024.
There were no EPS or HEPS adjustments for the year to end-September 2025 other than a loss on the sale of property, plant and equipment of R2.2m. However, HEPS for the previous period were affected by one-off professional, legal and JSE listing fees totalling R45m and the call option derivative asset of R426.5m relating to the pre-listing call options on the founders’ 25.1% shareholding in the group.
The fair value loss on derecognition of the call option derivative was one-off in nature, noncore and had no cash flow impact, it said.
Though no reasons were given for the expected increase in full-year earnings, the group had noted at the halfway stage that it had experienced higher volumes and selling prices, improved margins and cost efficiencies driven by economies of scale. Investment and enhancements to the technology platform resulted in operational efficiencies and margin improvements.
At the release of its interim results the group said it had made progress towards its goal of buying and selling 23,000 vehicles a month by 2028.
Among the highlights of the first half were the addition of 10 new buying pods, bringing the group’s national footprint to 93 across the country, and the successful relocation of the Pietermaritzburg supermarket to a larger site with 300 parking bays. It also expanded capacity at the group’s George, Polokwane, the Dome, Johannesburg South, Riverhorse Valley and Gqeberha facilities.
The group will release results on November 17.
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