MW CarMax is 'stuck in neutral.' And yes, it's also about Carvana.

By Claudia Assis

Morgan Stanley downgrades CarMax's stock just a month after saying there was hope for the used-car retailer

CarMax's trajectory has worsened due to increased competition and ongoing strategy problems, Morgan Stanley said.

CarMax has run into disfavor at Morgan Stanley, which barely a month ago gave the used-car retailer a vote of confidence that evaporated amid steep losses for the stock and the loss of the company's longtime chief executive.

CarMax $(KMX)$ "is stuck in neutral," Morgan Stanley analysts said in a note Tuesday. The analysts downgraded their rating on the stock to the equivalent of hold.

In early October, they signaled concerns about CarMax, particularly as competition from Carvana (CVNA) heated up, but they kept their buy rating on the shares "on the thesis that expectations had been materially reset and that the company could execute ahead of a lowered bar. That was not the case," the analysts said.

CarMax's trajectory has worsened due to increased competition, "a consumer challenged by affordability issues" and some ongoing strategy execution problems that are unique to CarMax, the Morgan Stanley analysts said.

CarMax last week announced the departure of CEO Bill Nash, who is stepping down at the end of the month. Board member David McCreight has been named interim CEO. McCreight was CEO of Lulu's Fashion Lounge $(LVLU)$ from 2021 to 2023 and was also an executive at Urban Outfitters $(URBN)$.

"The CEO update is a recognition of underperformance and reflective of a board with a sense of urgency for change," the analysts said.

CarMax is still a "high-quality brand with valuable strategic assets," including about $3 billion worth of inventory, the analysts said. The stock's declines, however, reflect some of Wall Street's concerns about the company's strategy and the potential for more market-share losses.

Carvana is "our favorite idea in auto retail," the analysts said. "We believe that the negative growth CarMax is experiencing is reflective of a highlycompetitive used-car market and demonstrates Carvana's competitive moat."

Shares of Carvana and CarMax are going in opposite directions this year: Carvana's stock has gained about 58%, while CarMax's stock has lost 58%. CarMax shares have lost nearly 20% this month, while Carvana's have gained about 5%. For the year, the S&P 500 index SPX has seen gains of about 16%.

-Claudia Assis

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November 11, 2025 12:11 ET (17:11 GMT)

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