Sonic Automotive (SAH) shares plummeted 7.10% in pre-market trading on Thursday following the release of its third-quarter 2025 financial results. Despite beating revenue expectations, the company's earnings fell short of estimates, raising concerns among investors about the auto retailer's profitability and future outlook.

The Charlotte-based auto sales chain reported Q3 revenue of $3.97 billion, a 14% increase year-over-year and significantly above the $3.60 billion analysts had expected. However, the company's adjusted earnings per share (EPS) of $1.41 missed the consensus estimate of $1.70. Net income for the quarter fell sharply to $46.8 million, or $1.33 per share, compared to $74.2 million, or $2.13 per share, in the same period last year.

Sonic Automotive attributed the decline in profitability to a significant increase in medical expenses and higher taxes. The company's total cost of sales rose to $3.36 billion from $2.95 billion a year ago, while selling, general, and administrative expenses jumped to $451.6 million from $392.1 million. Adding to investor concerns, Sonic's management highlighted ongoing uncertainty around the future impact of tariffs on consumer demand, vehicle pricing, gross margins, and inventory levels. These factors, combined with the earnings miss, appear to have overshadowed the revenue beat, leading to the sharp decline in the stock price.