CarMax, the largest used-car retailer in the United States, is set to face a critical moment Monday as activist investor pressure intensifies around the company's newly appointed chief executive, with the stock trading below $45 and calls growing for a formal strategic review. The activist fund, which has been quietly accumulating a stake in the Richmond, Virginia-based company, is expected to formally demand board representation and outline a restructuring agenda targeting CarMax's cost structure and digital retailing unit CarMax Auto Finance.

The new CEO, who took the helm in recent weeks, must now navigate an early leadership test that analysts say could define the company's direction for the next several years. Investors are watching closely for any signal that management is willing to engage with the activist rather than entrench against its proposals. Monday's open market activity and any regulatory filings — including potential Schedule 13D amendments — are expected to clarify the activist's intentions.

At the core of the dispute is CarMax's slowing comparable-store sales growth and the performance gap between its brick-and-mortar locations and online competitors including Carvana, which has staged a dramatic recovery. The activist argues that CarMax's sprawling physical footprint, while historically a competitive advantage, has become a drag on returns on invested capital amid shifting consumer purchasing habits.

Analysts at several Wall Street firms have noted that CarMax's valuation at sub-$45 per share represents a historically low multiple on earnings, making the company a plausible target for either activist-led restructuring or, in a more dramatic scenario, a leveraged buyout. Private equity interest in automotive retail has been elevated in recent months as used-vehicle prices stabilize from their pandemic-era highs.

Industry observers expect CarMax to respond to the activist campaign through a combination of investor relations outreach and, potentially, the announcement of an accelerated share buyback program or cost-reduction targets. Any formal communication from the company's board is likely to be closely parsed for signs of compromise. The situation echoes activist campaigns at other large specialty retailers in recent years, where early engagement typically produced faster resolutions than prolonged public disputes.