Digital car dealer Carma hit by tech sell-off but analysts remain bullish

Carma is a Sydney-based digital car dealership that buys used cars and resells them, with the aim of making a margin on each sale.

One of the major casualties on the ASX since the global tech sell-off in the past month has been the recently listed digital car auction business Carma, with its shares trading 37 per cent lower than its initial public offering price.

But analysts at Canaccord – one of the firms that worked on the float – are continuing to back the business and its prospects.

High-growth businesses have been hit hard as part of the global technology stock sell-off linked to fears of an artificial intelligence bubble.

When Carma was planning its listing, the ASX was trading at a record high, but in the past four weeks it’s down more than 7 per cent.

Shares were sold in the IPO at $2.70 with the deal well supported by institutional investors before it listed in early November. The stock is now at $1.68.

But in a research note, Canaccord said Carma was disrupting the large and highly fragmented Australian $118bn used-car market and believed its earnings would be higher than the guidance provided by the business in the future.

The company expects to generate $3600 per retail unit this financial year, but Canaccord expects its gross profit to increase to $5400 by fiscal 2028 from $2700 last financial year.

The firm has put a $3.50 per share price target on the stock.

Carma is a Sydney-based digital car dealership that buys used cars and resells them, with the aim of making a margin on each sale.

It believes it is catering to a gap in the market and could eventually move into profitability.

The business was founded in 2021 by former investment bankers Lachlan MacGregor (ex UBS) and Yosuke Hall (a former Goldman Sachs analyst) and they argue it is the only group to buy and sell used cars online in Australia.

The hope is that it becomes Australia’s version of its $US69bn ($106bn) US equivalent Carvana, which has seen its share price sold off by 6 per cent in the past month.

The tech sell-off shines the spotlight on 2026 float hopeful Firmus Technologies, which has drafted in Wall Street banks JPMorgan and Bank of America to work on a listing with Highbury Partnership and Morgans.

The business that designs and operates AI cloud and AI factories is claiming a $6bn valuation based on its recent $500m fundraising efforts, and if it pulls off a listing, it would prove to be a redemption story for co-chief executive Oliver Curtis, who was jailed for insider trading.

While the group has its doubters given it is yet to have completed assets in Australia or secure any customers here, some believe that a deal could get across the line given the powerful institutional investors such as Ellerston Capital that have already financed the business.

Nvidia has also provided it funding as one of its many early bets globally, as has CDC Data Centres.

Firmus, chaired by ex-JPMorgan banker and TPG Telecom executive Grant Dempsey, says its funding will pay for its Project Southgate initiative, where it will build AI factories with scale up to 1.6 gigawatts through to 2028.

The project will be anchored by an AI Factory Campus in Tasmania that is under construction before the rollout of AI Factories in mainland Australia.