Hi [USER=4107]@jon.berna[/USER].
You know I was a self-employed stock trader for a decade, I still dabble in it a bit. Regarding valuations, I love this site:
https://simplywall.st/compare/NasdaqGS:CARG-NYSE:CARS
[ATTACH=full]4042[/ATTACH]
On this metric alone, CARS is undervalued. But, on a PEG basis, BOTH are overvalued. CARS is barely growing > inflation, where CARG is growing ~20%. With CARG's growth comes a far higher PE, and higher PEs = higher risk (e.g. the execution of the vision falls short).
At 1st glance, CDK buying CARS to me is a strategic fit. It's safe to say that many GM dealers are going to jump off CDK... just because they can. Buying CARS buys DI, so, CDK can keep some of the defectors in the family. CDK can look at Cars.com's platform & brand as a strategic play that could be a door to help them morph into MAAS (Mobility As A Service).
My $0.02 sees CDK takeover of CARS as yet another nail in the coffin of innovation in our space. Everywhere we look, the theme among the big boys are "consolidation, not innovation".
The big boys had better be careful, this obsession to rollup vendors into a "single sign-on, you can't leave me platform" meets little resistance when SAAR is rising -AND- when profits are good. BUT... profits from sales are trending down with no end in sight. When SAAR rolls over (not if SAAR rolls over), dealers get out the machete and wack big marketing expenses with little to no analysis.
In my travels, I sense that dealers are shutting down all the little $500 p/mo vendors and wanting to cut one of the Big 2 (AT or CARS) and leave CARG.
We've come to that place in the auto-sales-cycle, there's a shift in the air. Nothing at NADA had wow-factor. I think the new theme for dealers is "hunker down for the coming storm".
