Vroom Stalls Out After Its Debut Earnings Report. Is More Trouble Ahead?
Vroom (NASDAQ: VRM) stock was looking like a lemon after its first earnings report as a publicly traded company.
The online used car dealer was well-received in its June IPO -- shares doubled out of the gate before tacking on another 50% ahead of the second-quarter results. However, investors were clearly disappointed with what they saw on Thursday; the stock fell as much as 23% on the news.
Though the company beat estimates, investors seemed concerned about the sharp drop in average selling prices and gross profit per unit, as well as guidance that forecast average selling prices would fall further to $23,500 in the third quarter. The bigger concern, however, was that management predicted Q3 revenue would decline by 15% to 21% to a range of $268 million to $290 million, well below analysts' consensus expectation of $344.6 million. However, because of the components of the company's business, which include physical location and wholesale channels, that forecast is a bit misleading. We'll get to the details about why later.
Source Fool.com