TrueCar, Inc. (TRUE) shares moved more than 7% lower in pre-market hours despite the company reporting better-than-expected fourth quarter financial results. Revenue rose 12.2% to $83.1 million – beating consensus estimates by $1.3 million – while net income of five cents per share beat consensus forecasts calling for an break-even quarter. While these results exceeded analyst expectations, weak guidance for the first quarter sent shares lower.
During the first quarter, the company expects revenue of between $80 million and $82 million, which was lower than analyst expectations averaging $82.27 million. The company's full-year revenue guidance was for a range of $360 million to $365 million, which was still in line with analyst estimates that averaged $362.83 million. In November, the stock had plunged more than 30% after a mixed third quarter and lower guidance. RBC analysts also lowered their price target on TrueCar shares at the time from $23.00 to $18.00 but retained an Outperform rating following the earnings report. (See also: Buying a New Car: Websites, Tools and Apps to Use.)
From a technical standpoint, the stock rebounded from its lower trendline and S1 support levels at around $11.11 to the pivot point at $11.91 on Thursday. The relative strength index (RSI) appears neutral at 57.75, while the moving average convergence divergence (MACD) remains at depressed levels. The long-term trend remains decidedly bearish following the sharp decline late last year, but the intermediate-term trend has been neutral.
Traders should watch for a breakdown from lower trendline support at around $11.00 to S2 support levels at $10.43 on the downside. A breakdown from these levels could lead to the stock to retest its lows. On the other hand, if traders see the earnings reaction as overdone, traders should watch for some consolidation above lower trendline support before a potential move higher toward upper trendline and R1 resistance at $12.56. (For more, see: The Industry Handbook: Automobiles.)
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.