Vroom skids to all-time low after earnings disappoint

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Vroom (VRM -40.5%) slumped to a new all-time low after the auto retailer missed consensus estimates with its Q4 earnings report.

Analyst said Vroom (NASDAQ:VRM) appears to be struggling with macro headwinds as well as inventory management and pointed to the weak GPPU (gross profit per unit) mark during the quarter.

Looking ahead, Vroom (VRM) said it expects the GPPU mark to improve this year.

CFO Robert Krakowiak: "For 2022, we expect a further increase in ecommerce GPPU and continued leverage of our SG&A spend as we begin to capture the benefits of captive financing and sharpen our focus on incremental unit economics throughout our business."

Shares of Vroom (VRM) traded as low as $3.61 earlier in Tuesday's session.

Short interest on Vroom (VRM) stands at 17.80% of total float, which could add to the volatility.

The Seeking Alpha Quant Rating on Vroom (VRM) has been flashing Sell since August.

Comments

[bazooooka]

Looked cheap near two bucks...but they need to plug the holes

[The Real Cavalier]

Investors are really dumping the negative operating margin stocks today. No regard for the industry.

CHWY - pet supplies
W - furniture
VRM - Used cars
QS - batteries
DASH - food delivery

Its a long list.

[User 49057922]

@DavidHHolmes That is a true fact, Everyone worried about easy money, no longer being easy for these start-ups. 3 years go, If you had revenues of $2B+ plus with 100% year over year increase in revenue?

Wall-Street didn't care about profits - Have your market cap at $50Billion +

[The Real Cavalier]

@JamesNewYork Given the macro nothing is working right now. A little disheartening but I've been to the rodeo before. Good luck investing.

[User 49057922]

@DavidHHolmes Have to look at this as a opportunity

[vvvviking]

While seeking growth these companies, not just Vroom, have pushed up used car prices. Anyone with a brain who has a used car to sell, contacts these fools, where they fall over each other trying to bid it up. They sow the seeds of their own destruction in the pursuit of growth.

[The Real Cavalier]

@vvvviking So true! They are creating the scarcity and price run up for themselves. Instead of a used car simply going from the seller to the buyer it now goes to recon and then may sit on a corporate balance sheet financed with cheap money for months. Its in large part created a supply problem.

Regrettably, a similar story has unfolded in the used house market. Corporate buyers armed with billions of Wall Street money are artificially raising prices as they compete in an ever rising market for few houses available for purchase.

[NeoNarrative]

@vvvviking If they're fools for buying cars at elevated prices, I suppose customers are fools for buying them at even higher elevated prices. They're not having any trouble moving cars. If you're at all involved with moving product through freight carriers and at all trying to do hiring yourself, you'll know that these business costs are off the rails. When/if things normalize, VRM will be fine.

[cssys]

@DavidHHolmes looking like 2007..... get ready for bust..

[BullvBear]

The earnings call was a joke. Executives have no accountability and delusional vision about wiping billions in shareholder equity.

[cssys]

maybe carvana will buy vrm. cvna + VRM+ KAR = BK....x3

[FirasMHM]

The market cap is below 500 million now while they hold more than 1 billion in cash. I guess this stock proves there is no bottom for underperforming stock. The bottom is limitless.

[The Real Cavalier]

@FirasMHM Look at their financial statements and do the math. Unless they pivot, they will surely run through that money because as it is the business model is fatally flawed. They will never turn an operating profit.

[FirasMHM]

@DavidHHolmes

What I don’t understand is You can always raise prices and sell less. The growth rates are insanely high. Which means T hey can afford to raise prices even if growth slow down a little bit. If they do that they reduce the cash burn. I do understand why don’t why just raise prices.

[FirasMHM]

@DavidHHolmes

They can raise more money. But they burn 350 million a year. How much more can you raise if you burn almost as much as your market cap each year. They will have to cap the cash burn or they are done in couple of years.