Stock Track | Karooooo Stock Plunges Despite Strong Q2 Results, Raising Growth Concerns

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Shares of Karooooo Ltd. (KARO) plummeted by 15.34% on Monday, despite the company reporting strong financial results for the second quarter of fiscal year 2025. The South African telematics and logistics company announced a 17% year-over-year increase in subscribers to 2.14 million and a 15% growth in subscription revenue to ZAR986 million (approximately $60.7 million).

Karooooo's core tracking business, Cartrack, delivered a record 89,168 net subscriber additions, an 18% year-over-year increase, and saw its gross margin improve by approximately 300 basis points to 74%. The company's adjusted earnings per share also increased by an impressive 31% year-over-year to a record ZAR7.35, surpassing analyst estimates.

However, despite these positive results, investors seemed concerned about the company's future growth prospects. While Karooooo raised its full-year 2025 outlook for subscribers and Cartrack subscription revenue, the market may have expected even more aggressive guidance, given the strong performance in the first half of the fiscal year.

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