Used car retailer Motorpoint (MOTR) rebounds 2.7% to 143.25p as directors mop up shares in a much-needed show of faith.

Sentiment towards the relative market newcomer was rocked earlier this week by a profit warning, though investors are drawing succour from news of director buying the day after the update.

Co-founder David Shelton, CEO Mark Carpenter (pictured below) and non-executive chairman Mark Morris have all stumped up £1.79m cash and bought shares at 138p in the wake of Wednesday's half year update, which saw the wheels come off the share price.

Motorpoint guided towards 11% sales growth for the six months to 30 September, 'underpinned by a positive like-for-like performance', though this is well below the 18% growth rate forecast by Numis Securities.

Carpenter and co explained that 'because of the uncertainty around the result of the EU referendum, management has invested in margin to protect the group's good level of stock turn, and managed its stock levels carefully. Accordingly, the volume and margin performance in the first half is behind original management expectations.'

In a nutshell, management expected a tougher market following the vote for Brexit and cut prices to keep stock turning over, while also passing on some more expensive vehicles and reducing marketing spend.

These measures lowered per-vehicle profitability and the range available to customers and Numis slashed its full year taxable profit forecast from £21 million to £16.7 million accordingly.

Motorpoint, which debuted on the Main Market in May at 200p, mainly sells vehicles up to two years old with less than 15,000 miles on the clock. It argues its 'unique and flexible stock sourcing model, combined with new car registration figures from the Society of Motor Manufacturers and Traders (SMMT), which show continued growth in fleet registrations, provides a strong supply outlook as a significant proportion of stock is sourced from fleet companies. Early indications in H2 are also showing improving margin trends.'

Numis remains bullish, though has downgraded its price target from 275p to 250p. The broker wrote that 'while clearly disappointing, the soft H1 earnings performance appears to be somewhat one-off (and potentially self-induced) in nature, rather than anything more structural. As such, and with the roll-out continuing and ‘positive progress’ being made on a number of new sites, we retain our positive stance, albeit with a lower target price.'

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