WeBuyCars Share Price Crashes 14% on JSE as Trading Update Disappoints Growth Investors
JOHANNESBURG, South Africa – The share price of South Africa’s leading vehicle trading platform, WeBuyCars, suffered a dramatic collapse on Tuesday, plummeting by 13.57% in a single trading session after the company released a trading update that failed to meet investor expectations for the growth stock. The severe market reaction highlights the increasing volatility facing South African equities, particularly for recently listed companies trading at premium valuations.
The dramatic sell-off occurred despite the company projecting impressive headline earnings growth of over 100% for the year ended 30 September 2025. The paradox between strong earnings growth and a crashing share price underscores the complex dynamics influencing modern equity markets, where earnings per share and growth expectations often trump absolute profit figures.
The Dilution Dilemma: When Growth Doesn’t Translate to Shareholder Value
At the heart of Tuesday’s market disappointment was the significant dilution effect caused by WeBuyCars’ issuance of 83 million new shares earlier this year. While the company projects core headline earnings to increase between 12% and 17%, the massive expansion in share count means core headline earnings per share are expected to rise by a meager 0.8% to 6% – a figure that failed to excite investors who had priced the stock for explosive growth.
“The share is expensive, and expensive shares cannot disappoint,” explained a market analyst familiar with the situation. “When the company reported earnings of R2.14 to R2.15, which was essentially flat, the market reacted negatively. The reason is that WeBuyCars is viewed as a growth stock.”
The new shares were issued in February, March, and April 2024 as part of the company’s pre-listing capital raise, which was approved by shareholders prior to WeBuyCars’ debut on the Johannesburg Stock Exchange. This issuance has increased the total weighted average number of ordinary shares to 417,401,341, up significantly from 375,029,205 in 2024, creating substantial dilution for existing shareholders.
Market experts note that the reaction exemplifies a broader trend in contemporary equity markets, where the penalty for disappointing growth expectations has become increasingly severe. “Twenty years ago, a share price would fall by a few percent when it released disappointing results,” the analyst noted. “Today, if the results disappoint in any way, it falls ten to twenty per cent, much higher than previously.” This intensified reaction is partly attributed to the growing presence of foreign investors in the local market who “shoot first and ask questions later.”
The dramatic decline saw WeBuyCars crashes in market value, erasing billions of rand in shareholder wealth in mere hours. The severity of the sell-off highlights the precarious position of growth stocks in the current economic environment, where investors show little patience for companies that fail to meet elevated expectations. For ongoing coverage of this developing financial story, our South Africa news desk is providing continuous updates and analysis.
Broader Market Pressures: The Chinese Automotive Threat
Beyond the immediate dilution concerns, market observers point to broader industry headwinds that may be contributing to investor anxiety about WeBuyCars’ future growth prospects. The influx of affordable Chinese vehicles into the South African market is creating unprecedented competition for the used car sector, potentially disrupting WeBuyCars’ traditional business model.
“There is widespread speculation that cheap Chinese cars entering the South African market are putting pressure on WeBuyCars,” noted an industry expert. “With the much lower entry point for new cars, which is often cheaper than many used cars, the secondhand car market is taking strain. Many South Africans may prefer to buy a cheap new Chinese car rather than a secondhand Corolla.”
This competitive pressure represents a fundamental challenge to the used vehicle market that forms the core of WeBuyCars’ operations. As Chinese manufacturers like Chery, Haval, and BAIC continue to gain market share with aggressively priced new vehicles featuring modern specifications and warranty protection, the value proposition of used vehicles at similar price points becomes increasingly difficult to maintain.
Despite the negative market reaction, some investment professionals are advising caution against overinterpreting a single trading update. Mark du Toit from Oyster Catcher Investments highlighted that the trading update contained “very little information” and recommended that investors await the full results before making definitive judgments about the company’s investment merits.
“They had a good first half. The trading update shows that they had a much slower second half,” du Toit observed, suggesting that the market might be overlooking the company’s strong operational foundation amid the earnings per share disappointment.
WeBuyCars sought to provide context for its performance metrics in the trading statement, explaining that “WeBuyCars utilises core headline earnings to measure and benchmark the underlying performance of the business. Core headline earnings represent headline earnings adjusted for certain non-recurring or non-cash items that, in the view of the group’s board of directors… may distort the financial results from period to period.”
The company’s basic earnings are projected to rise by more than 100% from R343.1 million in 2024 to over R926.8 million when official results are released next month. This substantial operational improvement suggests that the underlying business remains robust, even if shareholder dilution has tempered the per-share benefits.
The dramatic market reaction to WeBuyCars’ trading update reflects the heightened sensitivity of growth stocks to any sign of slowing momentum. As investors increasingly favor companies that can demonstrate sustainable earnings growth without significant dilution, the pressure on recently listed firms to manage their capital structure carefully has never been greater.
The company’s audited financial results for the year ended 30 September 2025, scheduled for release on 17 November, will provide greater clarity on the company’s operational performance and future prospects. Market participants will be watching closely for management’s commentary on the competitive landscape and the company’s strategy for navigating the challenges presented by the influx of affordable new vehicles.
Tuesday’s events serve as a stark reminder of the volatility inherent in equity investing, particularly for growth companies trading at premium valuations. The episode demonstrates how even companies with strong absolute earnings growth can face severe market punishment when that growth fails to translate into improved earnings per share due to dilution. As WeBuyCars crashes through key support levels, the broader question for investors remains whether this represents a temporary setback or a fundamental repricing of the company’s growth trajectory in the face of industry disruption. Further details on this developing financial story can be found through reputable sources like Moneyweb.
