Vroom IPO Confidentially Filed with SEC
A Vroom IPO is coming to the markets. The company confidentially filed to go public with the SEC. Now investors are wondering when to expect Vroom stock.
But is Vroom a good investment? Here’s what we know…
Vroom IPO: the Business
In August 2013, three friends founded Vroom. Vroom is an online car resale service. Currently, the company is headquartered in New York City. Vroom handles the process between buyer and seller rather than a peer-to-peer model, like Craigslist for example. It also offers financing through multiple banks and provides delivery nationwide.
Vroom’s CEO is Paul Hennessy, the former CEO of Priceline.com. In addition to his 20 years of experience, he brought John Caine with him. Caine is the former CPO (chief procurement officer) at Priceline and serves as Vroom’s CCO (chief conversion officer). His role is to look at Vroom’s online process and find ways to make it easier for both buyers and sellers. Both executives want to create the best platform for researching, buying and selling cars.
Also, Vroom received funding over the years from investment firms such as T. Rowe Price and Allen & Company. In December 2019, Vroom closed on $250 million in funding. This brought Vroom’s total funding past $700 million and the company’s value to $1.5 billion.
But investors interested in the Vroom IPO should know why the startup is moving to the public markets.
Vroom Stock: Why Now?
The IPO market isn’t highly active due to the coronavirus. The volatile markets aren’t as welcoming to new listings. But there have been successful IPOs. Both DraftKings and WiMi successfully went public during the coronavirus.
And it’s the coronavirus that is giving Vroom the advantage it needs. Since people are staying home, online retailers have seen an increase in activity. Vroom is no different. The company allows people to shop for cars from the comfort of their homes. It also gets it delivered straight to their door. It’s convenient and easy. It also follows social distancing rules many states have in place.
Some analysts also believe the company wants the Vroom IPO to copy the success of its competitor Carvana (NYSE: CVNA).
Vroom vs. Carvana: the Competition
The Carvana IPO hit markets in 2017. Although its stock took an 80% hit from the bear market, it’s recovered to near-record highs. And Vroom hopes it will achieve a similar result with its IPO.
Carvana is a larger company based on sales. But Vroom isn’t far behind. Before the pandemic, Vroom’s projections for 2021 were $3.2 billion in sales. Now the company is aiming for $2 billion. Despite this decrease, that’s still about half of Carvana’s 2019 sales of $3.9 billion. Vroom also has an advantage because the company expanded its online platform more quickly.
Hennessy isn’t worried about the pandemic shutting business down. Instead, he believes it could give the company a boost. Since people are staying home, they have more time to spend shopping and looking around on the internet.
So the question on investors’ minds is…
When Will Vroom IPO?
Vroom confidentially filed with the SEC. That means the SEC received filing information from Vroom for review, but that information isn’t public yet. So there is no firm date for the Vroom IPO. However, analysts believe it could come as early as June 2020.
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Vroom is the second tech IPO in 2020 due to the pandemic. So whenever the Vroom IPO does hit the market, investors will want to see whether it’s a success.
About Amber Deter
Amber Deter has researched and written about initial public offerings (IPOs) over the last few years. After starting her college career studying accounting and business, Amber decided to focus on her love of writing. Now she’s able to bring that experience to Investment U readers by providing in-depth research on IPO and investing opportunities.