Regency View:

TAKE PROFITS Auto Trader (AUTO)

Close Auto Trader (AUTO) at market (790.4p)

We’re continuing our end-of-year portfolio rebalancing by banking profits in another market leader, this time Auto Trader. Our position, held since 2022, is up 33%, and while the business remains a standout in the UK automotive marketplace, the timing feels right to lock in gains. Auto Trader’s long track record of strong margins and returns on capital is undeniable, but with the shares now pricing in much of its strength, we’re stepping back to reassess our exposure.

The recent half-year results, while solid, flagged a few areas of concern. The Digital Services Tax added to costs, and growth in Average Revenue Per Retailer was diluted by an influx of smaller, lower-yielding retailers. Broader challenges in the automotive sector, from declining new car retail volumes to continued supply constraints, have added to the cautious tone. While Auto Trader’s investments in digital innovation, like Deal Builder and Co-Driver, point to long-term potential, the near-term outlook is a touch less convincing. Taking profits here allows us to free up capital for fresh opportunities as we head into 2025.

Profit = +33.1%

AUTO Daily Candle Chart