Vroom’s stock more than doubled on the first day of trading as the pandemic accelerates online shopping

0
79


The top executive at Vroom Inc. is betting more people will give a try to buy used cars online amid the coronavirus pandemic, and Wall Street, at least Tuesday, seemed to agree.
Vroom actions
VRM,
+ 117.72%,
an online used car seller gained 118% on its first day of trading, and rally continued during the extended session, with Vroom shares up over 3%. The business has never been profitable since its inception in 2012, its dividends are nowhere in sight and its losses have accumulated.

The pandemic is a difficult time for people in the United States and elsewhere, but more and more American residents are considering Vroom, looking for contactless car purchases and deliveries, Vroom general manager Paul Hennessy said at MarketWatch.
Related:Vroom IPO: 5 things to know about online used car salesman “We actually have momentum coming our way,” as people are more likely to consider buying cars online right now, in addition to the other benefits that Vroom offers, said Hennessy.
While Vroom hopes to benefit from a broader transition to online shopping accelerated by the pandemic, economic uncertainty and turbulence in the auto industry could make its business model more difficult.
According to Vroom’s prospectus, the company lost $ 143 million in 2019 and $ 41.1 million in the first quarter, compared to losses of $ 85.2 million in 2018 and $ 27.1 million in the first quarter of 2019.
Hennessy, former CEO of Priceline.com and marketing director of Booking.com, both owned by Booking Holdings Inc., has been running Vroom since 2016.
He declined to give a clear timeline for Vroom’s profitability, but said the company had a “clear view” of profits once it reached a sales pace of 200,000 vehicles, which it plans to achieve. “In the years to come,” he said. Vroom sold just under 19,000 vehicles last year.
Do not miss:The IPO market is preparing for another busy week with 8 transactions that should bring in $ 2 billion
The company was “humiliated” by the success of the IPO, and after increasing the IPO price range twice, it knew that investor enthusiasm would be there, said Hennessy. Vroom valued the IPO at $ 22 a piece.
Vroom’s performance is the latest sign of green shoots for the IPO market, with the biggest contract of the year, Warner Music Group Corp.
WMG,
+ 3.22%

price at the upper end of its price range last week.
Vroom has a major competitor in Carvana Co., also an online used car sales platform, which went public in April 2017.
Carvana may have turned its wheels on the day of its IPO, having stopped it by almost 3%, but it more than compensated for the difficult start and gained more than 900% compared to its price d introduction of $ 15.
Hennessy said there is room in the market for more online car sellers, given that current e-commerce penetration is less than 1%.
In addition to being a contactless option in the event of a pandemic, customers also praise Vroom’s selection of cars nationwide, compared to purchases made at their local used car fleet; its pricing, which Hennessy called “transparent” and said it avoided haggling, which most customers don’t like; and the boutique aspect of anywhere from experience. Vroom, like Carvana, also offers a 7-day return policy on its cars.
While close competitors are doing similar things, the market is so fragmented that, in reality, Vroom has thousands of competitors in dealerships scattered across the United States, not to mention the very large peer-to-market -peer, said Hennessy.
Only a handful of top players share a small share of the market, he said. ‚ÄúThere are a lot of ways to disturb it. “

LEAVE A REPLY

Please enter your comment!
Please enter your name here