Vroom (VRM) Discontinues E-commerce Used Vehicle Operations
Vroom, Inc. VRM announced that it is discontinuing its e-commerce operations and shutting down its used vehicle dealership business to preserve liquidity and optimize stakeholder value.
Vroom is a parent company of CarStory and Unites Auto Credit Corporation (“UACC”). Both CarStory and UACC will keep serving third-party customers.
The company is suspending transactions through vroom.com as per the Value Maximization Plan approved by its board of directors. It plans to sell its current used vehicle inventory through wholesale channels and halt purchases of additional vehicles. As part of the plan, Vroom expects to lay off 800 employees, which makes up 90% of the company’s total workforce.
Established in 2013 by two American entrepreneurs, Vroom, a used car trading business, was overtaken by Elie Wurtman and Allon Bloch, who turned it into an online platform dealing with the purchase, repair and sale of vehicles.
Vroom went public in June 2020 and hit a record $8.1 billion valuation in August 2020, but its market cap slid to $75 million in January 2024.
Per Thomas Shortt, CEO of Vroom, the company failed to raise additional capital to fund its operations and support the extension of its vehicle floorplan facility beyond its current expiration date of Mar 31, 2024.
Per the company’s reports, in the third quarter of 2023, Vroom registered a net loss of $83 million and carried out 4,561 used car sales transactions, representing a decline of 29% from the corresponding quarter of 2022.
Zacks Rank & Key Picks
VRM currently carries a Zacks Rank #3 (Hold).
Some better-ranked players in the auto space are Volvo VLVLY, Mercedes-Benz Group AG MBGAF and BYD Company Limited BYDDY, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
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The Zacks Consensus Estimate for MBGAF’s 2023 sales implies year-over-year growth of 5.8%. The EPS estimates for 2023 and 2024 have moved up by a penny and 30 cents, respectively, in the past 60 days.
The Zacks Consensus Estimate for BYDDY’s 2023 sales and earnings suggests year-over-year growth of 35.7% and 72.9%, respectively. The EPS estimate for 2023 has improved by a penny in the past 30 days.
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