CarParts.com is a high-risk turnaround with improving unit economics, a 0.2x EV/Sales valuation, and substantial upside if its 2026 free-cash-flow inflection proves durable.
Overview
CarParts.com is a digitally native, direct-to-consumer aftermarket auto-parts retailer serving primarily DIY customers, with a smaller DIFM presence. It sources directly from global manufacturers, uses proprietary fitment data, and distributes through a self-operated network capable of next-day or two-day delivery to 95% of the United States. Replacement parts represent approximately 67%-70% of revenue, hard parts 17%-20%, and private-label brands 81% of sales. **The key investment development is a shift from unprofitable growth to contribution-margin and cash discipline.** In Q2 2026, revenue fell 10.73% to $135.64 million as low-value marketing channels were removed, but gross margin improved to 33.22%, operating expenses declined 22.38% to $48.28 million, GAAP net loss narrowed to $3.22 million, and Adjusted EBITDA turned positive at $1.76 million. Cash rose to $38.2 million and the company generated $10.6 million of operating cash flow in the first 26 weeks. **Valuation remains distressed at 0.12x trailing EV/Sales and 0.15x Price/Sales.** Near-term catalysts are sustainable positive free cash flow in late FY2026, A-Premium scaling, and continued insider buying. The principal counterweights are tariffs, competition, the 2028 convertible maturity, and the need to prove the turnaround.