$13.33
$30.60
bear $13.33
base $24.77
bull $30.60
margin of safety $15.50
market price* $37.03
What the business is. OPENLANE (formerly KAR Auction Services) runs two businesses. The Marketplace segment runs digital wholesale used-vehicle marketplaces: dealer-to-dealer sales in the U.S. (OPENLANE and the former BacklotCars), Canada (including the ADESA Canada physical auctions) and Europe (the former CarsOnTheWeb), plus the private-label 'upstream' platforms that car makers' finance arms use to sell cars coming off lease. The company says most off-lease vehicles in North America are offered first, and only, on OPENLANE. The Finance segment, AFC, lends to independent used-car dealers against their inventory. AFC has done this since 1985 and holds about $2.6 billion of loans, funded mainly by borrowing secured on those loans. The company as it exists today dates from 2022, when it sold the ADESA U.S. physical auctions to Carvana and paid off most of its corporate debt. Earlier years describe a different company, so we only use 2020 onward, restated to today's business. What it earns. We measure cash earnings for shareholders: operating cash flow, with swings in working capital removed, minus stock-based pay and the capital spending needed just to keep the business running. We made two choices that lower the figure. First, we treat AFC's provision for loan losses ($42M in 2025, $54M in 2024, $59M in 2023) as a real cost. Accounting adds it back as a non-cash item, but money lost on bad loans is as real as any other expense for a lender. Second, until 2025 the Series A preferred stock held by Apax took $38M to $44M a year in dividends ahead of common shareholders, and we deduct that. Amortization of acquired intangibles (about $79M a year, mostly from the BacklotCars and CarsOnTheWeb deals) and the $251M write-down in 2023 are paper charges and are not deducted. The capitalized software that actually keeps the platforms running is deducted as capital spending. On this basis, earnings for common shareholders were about $100M in 2023, $90M in 2024 and $165M in 2025 ($0.92, $0.82 and $1.55 per share). The share count and debt changed in the past year. In October 2025 the company borrowed $550M (due October 2032) to buy back about half the preferred stock. In 2026 the rest converted into about 16.7 million common shares, bringing the count to about 123 million. So the preferred dividend is gone, but there is about $40M a year of new interest and more shares. Adjusted to today's structure, cash earnings were roughly $133M in 2023, $121M in 2024 and $187M in 2025. The 2023-2025 median is about $133M. We start from the 2025 level of about $187M instead, because the last four quarters all ran at or above it: the first half of 2026 alone produced about $120M after the new interest. We think 2023-2024 were a low point for off-lease supply, not a normal level. Recent growth has been faster than we assume. Owner earnings rose about 55% in 2025, and our first-year figure of $215M is about 13% above the 2025 level. The first half of 2026 already supports most of that. We value future cash at a flat 6% a year and use about 123.5 million diluted shares. Base case, about $24.80 per share: Earnings of about $215M in the first year and $225M after that. The small step up reflects more cars coming off lease. Those leases were already written in 2023-2025, a supply the company says reaches it first. We do not credit further gains in dealer-to-dealer market share, even though U.S. dealer volumes rose 31% in the second quarter of 2026, because share gains are not secured. AFC's profit has been steady at about $130M-$150M a year before tax from 2023 to 2025. It is assumed to hold. The business is assumed to keep earning at this level for about 25 years, then fade out over the following 10. Its dealer network, the exclusive off-lease platforms and AFC's four decades of lending support that, but digital rivals (ACV Auctions, Manheim, the Carvana-owned ADESA U.S., EBlock) make it contestable. Bear case, about $13.30 per share: Earnings fall back to the 2023-2024 level of about $125M by year three and stay there for about 20 years before fading. This uses risks the company has already shown or disclosed. Used-vehicle prices could fall, shrinking AFC's loan balances. Loan losses could return to 2024's 2.2% of receivables, versus about 1.2% in 2025. Higher used-car values could lead more people to buy out their leases, so fewer cars reach the wholesale market, which the company names as a risk (tariffs included). Rivals could take share in dealer-to-dealer sales. The $550M term loan makes this case worse because its interest is paid whatever happens to volumes. Bull case, about $30.60 per share: Off-lease supply keeps recovering over the next two years and flows mostly through OPENLANE's exclusive upstream platforms, taking earnings to about $265M. AFC grows with its dealer base, and the business keeps earning at that level for about 30 years before fading. We did not include gains that depend on new products, new countries or wider margins. Margin-of-safety price. The company is exposed to used-car prices and dealer credit, carries new term debt and faces strong competition. The margin-of-safety price is about $15.50, roughly 37% below the base case and close to the bear case. What would make this wrong: loan losses at AFC rising well above 2024's rate; off-lease volumes staying low because lessees keep buying their cars; ACV or Manheim taking dealer-to-dealer share; or the higher 2025-2026 earnings turning out to be a cyclical peak rather than a new normal. Two things could not be fully checked in the filings: the 2025 tax charge was unusually low, which we neutralized by removing a $32M deferred-tax benefit, and our estimate of the new term loan's yearly interest is based on the two quarters reported so far.