Investing.com – Shares in British online car marketplace Auto Trader hit a new record high on Thursday as strong demand for used cars fueled better-than-expected full-year results.
By 06:02 ET (1002 GMT) shares were up 12.46% at 821.60 pence, putting them on course for their biggest one-day gain in more than two years.
The rise in Auto Trader activity has been fueled by rising interest rates, which has encouraged car buyers to look for used cars instead of spending more on new ones.
The company said in a statement that demand remains “robust”, vehicles continue to sell faster than before the COVID-19 pandemic and supply is “gradually” improving. They added that the decline in trading prices earlier this year “has since stabilized in line with seasonal trends.”
But Auto Trader said the new car retail market was proving to be “more challenging”, particularly marked by higher rebate activity.
Average revenue per retailer, a key performance metric for Auto Trader, rose 12% in the twelve months ended March 31, driven by “continued adoption of complementary products and services,” the company said.
Full-year operating profit rose 26% to £348.7m and revenue jumped 14% to £570.9m, beating Visible Alpha’s consensus forecast by 3%, according to analysts at RBC Capital Markets.
“We are confident in the long-term growth opportunities for Auto Trader by digitizing the used car buying process. However, we believe that macroeconomic issues may lead to a slowdown in the adoption rate of products and high-yield packages in the near future,” RBC analysts said in a statement. Note to customers.