Starboard has reportedly built a $350 million stake in the omni-channel car retailer.
- Starboard has nominated two of its directors to CarMax’s board, Bloomberg reported.
- The activist investor has proposed a series of changes, including a push on offline sales and a cut in costs.
- Retail sentiment on Stocktwits for CarMax shifted to ‘bullish’ from ‘neutral.’
Shares of CarMax rose 4% in early premarket trading on Wednesday after reports said Starboard Value had amassed a $350 million stake in the company and nominated two directors to its board.
Bloomberg reported on Tuesday, citing sources, that Starboard sees an opportunity to accelerate the used car retailer’s turnaround under incoming CEO Keith Barr, who started this month.
Starboard Pushes For KMX Turnaround
Starboard has nominated its own CEO, Jeff Smith, along with Bill Cobb, the chairman and CEO of Frontdoor Inc., to CarMax’s board of directors, according to the report.
The reported development comes as CarMax has lagged rival Carvana in recent years. Starboard believes the CarMax business model, combining more than 250 physical car lots with online sales, is better because most buyers still prefer in-person sales.
The investor’s proposals include refurbishing vehicles more efficiently, reducing administrative and overhead expenses by more than $300 million, and adopting dynamic pricing, according to the report.
Retail’s View On KMX
KMX shares are down 42% in the past 12 months, while CVNA shares have risen 77% in this period.
On Stocktwits, retail sentiment for CarMax shifted to ‘bullish’ as of early Wednesday, from ‘neutral’ the previous day, amid ‘high’ message volume.
Starboard has previously invested in online auto seller Cars.com and Ritchie Bros. Auctioneers.
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