ACV Auctions Inc. (ACVA) shares plummeted 20.07% in Tuesday's pre-market trading session, following a wave of price target cuts from multiple financial institutions. The significant downward pressure on the stock comes despite the company reporting better-than-expected earnings for the second quarter.

Several prominent research firms adjusted their expectations for the online automotive marketplace company. Needham made the most substantial cut, lowering its target price to $16 from $25, a 36% reduction. Stephens followed suit with a dramatic decrease, reducing its target price to $11.50 from $16, a 28.1% drop. Citigroup trimmed its target price to $17 from $21, while BofA Global Research cut its price objective to $16.50 from $20. These widespread target price cuts suggest a shift in analyst sentiment regarding ACV Auctions' future prospects.

Interestingly, the stock's sharp decline comes on the heels of ACV Auctions reporting quarterly earnings that beat analyst expectations. The company posted earnings of $0.07 per share, significantly outperforming the analyst consensus estimate of a $0.06 loss per share. This represents a 170% increase over the same period last year. However, quarterly sales of $193.703 million missed the analyst consensus estimate of $196.179 million by 1.26%, although it still marked a 20.59% increase year-over-year. The market's negative reaction despite the earnings beat suggests that investors may be more focused on the analysts' lowered expectations for the company's future performance.