ACV Auctions Draws a $9 Million Vote of Confidence Despite a 60% Stock Drop

On January 23, Iridian Asset Management disclosed a buy of 1,108,301 shares of ACV Auctions (NYSE:ACVA), an estimated $8.97 million transaction based on quarterly average pricing.

What happened

According to a SEC filing dated January 23, Iridian Asset Management increased its position in ACV Auctions (NYSE:ACVA) by 1,108,301 shares during the fourth quarter. The estimated value of the additional shares is $8.97 million, based on the average closing price for the period. The fund’s quarter-end stake was valued at $23.97 million, a net position change of $5.33 million that includes both new purchases and changes in share price.

What else to know

Top five holdings after the filing:

• NYSE:ACVA: $23.97 million (8.8% of AUM)
• NYSE:HLF: $23.67 million (8.7% of AUM)
• NYSE:HGV: $20.81 million (7.7% of AUM)
• NYSE:POST: $16.75 million (6.2% of AUM)
• NYSE:LAD: $15.68 million (5.8% of AUM)

As of January 22, ACV Auctions shares were priced at $8.62, down 59.8% over the past year and vastly underperforming the S&P 500’s roughly 14% gain in the same period.

Company overview

Company snapshot

• ACV Auctions offers a digital wholesale vehicle auction platform, vehicle condition data services, and customer financing solutions.
• The company operates a digital marketplace that connects buyers and sellers for the online auction of wholesale vehicles.
• It serves automotive dealers, fleet operators, and other professional vehicle buyers and sellers across the United States.

ACV Auctions is a leading digital marketplace specializing in wholesale vehicle auctions and related data services. Its platform streamlines the process for professional buyers and sellers, providing transparency and efficiency in the automotive remarketing industry.

What this transaction means for investors

ACV Auctions has spent the past year getting punished alongside a weakening used-car market, yet the underlying business has continued to scale in ways the stock price doesn’t reflect. In the third quarter, ACV delivered record revenue of $200 million, up 16% year over year, while marketplace units rose 10% to more than 218,000 vehicles. Plus, adjusted EBITDA nearly doubled to $19 million, even as GAAP losses persisted, totaling $24 million for the quarter. Management guided for full-year revenue of up to $760 million and roughly 100% growth in adjusted EBITDA, signaling improving operating leverage despite macro pressure.

Iridian’s added stake solidifies ACV as its largest holding at nearly 9% of assets, ahead of names like Hilton Grand Vacations and Herbalife. Ultimately, ACV is not priced for sustained execution, yet it continues to expand volume, deepen services revenue, and generate operating cash flow. If wholesale conditions normalize, today’s valuation could look far less pessimistic than the market implies.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.