CarMax Short Sellers Mint $171 Million in One Day From 20% Drop

While CarMax Inc.’s earnings results — and subsequent 20% rout — dashed Wall Street’s expectations, the stark miss has been a $171 million boon to short-sellers.

The shortfalls were across the board in the used-car dealer’s second-quarter report: earnings trailed consensus by nearly 40%, revenue, used vehicle sales and gross profits also missed expectations. The earnings flub drove the stock to the lowest since March 2020 Thursday. For short sellers, the one-day paper gain was worth $171 million, according to Matthew Unterman, managing director at S3 Partners.

It’s a worrying signal for long-only investors amid growing concern about ...