Car seller Vroom zooms up in IPO
Share price of the auto sales platform doubles on its debut.
Auto sales platform Vroom Inc. more than doubled in its trading debut after racing past its earlier goals for its initial public offering to raise $468 million.
Shares of the company, whose backers include L Catterton, General Catalyst Partners and T. Rowe Price Associates Inc., rose 117% to $47.90 in trading Tuesday, giving it a market value of about $5.4 billion.
Vroom, which sells used vehicles online, moved up the pricing of the IPO to Monday after earlier planning to sell the shares Wednesday. It sold 21.25 million shares for $22 each, after marketing 18.75 million for $18 to $20, a range that had already been increased earlier.
“Investors recognize that this is a sector that really is poised for material growth on the online side,” said Michael Farello, a managing partner at L Catterton. “The company is truly ready to put the accelerator down and focus on growth.”
While demand for used cars has softened at the national level, Vroom sold more units in March and April this year than in any prior two-month period, according to its filings.
Although the IPO market heated up last week with more than $7 billion raised globally, venture-backed listings had been largely missing in action. ZoomInfo Technologies Inc., the business intelligence firm whose IPO raised $935 million Wednesday, was the first technology listing in the U.S. since Chinese cloud service provider Kingsoft Cloud Holdings’ IPO in April.
New York-based Vroom had a net loss of $41 million on revenue of $376 million for the three months that ended March 31, compared with a loss of $27 million on $235 million in revenue for the same period last year.
The COVID-19 pandemic might spur more car buyers to shop online, Vroom said in its filing. Its shares trade on the Nasdaq Global Select Market under the symbol VRM.