By Roshan Fernandez

Shares of CoPart slid after the company said cyclical forces drove an increase in the rate of uninsured and under-insured drivers.

Shares of the platform for online car auctions were down 12% to $53.46 during Friday morning's trading, with the stock on-pace for its largest percentage decrease since March 20, 2020 when it fell 14%.

"It won't surprise you that around the time of the global financial crisis in 2008 and 2009, there was a local trough in insurance coverage. I think it's not a surprise that we're experiencing that again now," Chief Executive Jeffrey Liaw said on the earnings call. "It does go up and down over time."

The company said U.S. inventory units were down 11% year over year. That applies pressure on future growth expectations, analysts at JP Morgan wrote in a recent report, because inventory volumes are a leading indicator of insurance volume sales in the next quarter.

"We would expect, over time, as has been proven over the decades, that these typical forces will reverse - will revert at some point as well," Liaw said.

The company reasoned that the inventory declines were due to demand softness and cyclical headwinds stemming from the rising mix of uninsured and under-insured motorists.

JP Morgan analysts called that reasoning uncharacteristic of CoPart, adding that management did not previously say they were anticipating material impacts.

The analysts also said the third-quarter results marked the second-consecutive period that CoPart's organic growth underperformed compared to Insurance Auto Auctions, a competitor.

They said the divergence in year-over-year growth trends between CoPart and Insurance Auto Auctions could be partly attributed to a contract win which the latter company announced in the second quarter of 2024.

CoPart's volume growth aligned more closely with broader industry trends, the analysts said, driving concerns about the forward volume growth trajectory.

Analysts also noted that unlike competitor Insurance Auto Auctions, CoPart did not see salvage car buyers hesitating as a result of tariffs.

Write to Roshan Fernandez at roshan.fernandez@wsj.com

(END) Dow Jones Newswires

May 23, 2025 12:37 ET (16:37 GMT)

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