The decision left investors stunned, said Gary Prestopino, an analyst with Barrington Research. "Everybody's kind of scratching their head," he said.
And it sent Cars.com's stock plummeting. The company's shares had closed at $18.04 on Aug. 2. On Aug. 5, the day of the announcement, the shares plunged 34 percent. By the market's close on Friday, Aug. 9, the stock was down to $9.03, a 50 percent drop for the week. "I don't think they realized the magnitude of what was going to happen here if they did not sell the company," Prestopino said.
Starboard Value Inc., an activist investor that had spurred the strategic review and penned an open letter in December calling for a leadership change or sale if the company's results didn't improve, unloaded a big chunk of shares the day of the announcement. Its last public disclosure beforehand, on March 30, put Starboard's stake in Cars.com at 9.6 percent; after its Aug. 5 share sale, it held 2.9 percent.
But Prestopino does not consider the situation dire for the Chicago company.
Cars.com still "looks like an attractive company" overall, he said.
Cars.com's second-quarter earnings also showed challenges. The company reported a net loss of $6 million, compared with net income of $12.7 million in the year-ago period. Adjusted net income fell 42 percent to $19.95 million. Revenue dropped 12 percent to $148.2 million.
The company attributed the revenue dip to a decline in dealership count and a $7.9 million drop in national advertising. Cars.com reported 18,891 dealership customers at the end of June, compared with 19,300 at the end of March.