Reuters
- Vroom on Wednesday reported quarterly earnings and gave an outlook that fell short of Wall Street's expectations.
- Shares of Vroom fell as much as 23% on Thursday.
- The company lowered inventory when the coronavirus pandemic hit. "These lower inventory levels prevented us from fulfilling all of the demand that materialized in the second half of the quarter," said Vroom CEO Paul Hennessy.
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Shares of Vroom tanked as much as 23% in intraday trading Thursday after the company gave an earnings forecast that fell short of Wall Street's expectations.
Here are the key numbers:
- Adjusted loss per share: $2 per share reported, versus 55 cents (expected)
- Revenue: $253.1 million reported, versus $234.9 million (expected)
The company expects that in the third quarter, it will have a net loss between 37 cents and 42 cents per share on revenue between $268 million and $290 million. Analysts expected that the online used-car company would project a loss of 36 cents per share and revenue of $344.6 million.
"In response to the drop in demand and uncertainty around vehicle pricing early in the pandemic, we chose to de-risk the business by significantly reducing our inventory during the first half of the quarter," said Paul Hennessy, Vroom CEO, in a statement.
In the second half of the quarter, the company started to rebuild its inventory "as demand increased and pricing became more stable," Hennessy said, adding, "These lower inventory levels prevented us from fulfilling all of the demand that materialized in the second half of the quarter."
That demand may be driven by people buying up used cars as they move out of cities and into the suburbs amid the coronavirus pandemic, Hennessy told Reuters in a Thursday interview.
He also said that Vroom's less-than-rosy third quarter forecast is due to falling average sales prices, which have taken a hit amid the pandemic as Americans become more hesitant to spend money.
Vroom has surged roughly 171% since its initial public offering in June.
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See Also:
- A full economic recovery will be 'very difficult' as long as COVID-19 remains a threat, Fed president Rosengren says
- Slashing extra federal unemployment benefits to $200 per week would lead to a 28% drop in consumer spending, study finds
- US economy beats forecasts, adds 1.8 million jobs in July as unemployment rate declines to 10%
