It’s time to sell Vroom, which is already down 80% this year, as the online used-car dealership will continue to face challenges during an economic slowdown, according to JPMorgan analyst Rajat Gupta, who downgrades the stock from neutral to underweight “We continue to see a challenging environment for the used car industry and favor companies that have ample liquidity and/or diversity in their businesses to navigate an uncertain macro environment.” Gupta added after reviewing the company’s plans for the “There is clearly no easy/quick fix or turnaround that is causing us to struggle with the investment case in the short to medium term. Vroom has struggled this year due to deteriorating market conditions such as rising car prices, rising interest rates and slowing demand , which are given to online car dealers goodbye Vroom’s stock is down 80% in 2022 and is 93% off its 52-week high. The stock fell 3.8% premarket Monday. Gupta also downgraded competitor Shift Technologies to underweight. The stock, with a market cap of just $104.69 million, is down almost 64% this year in cash flow and trading at ~4x 2023E EV/GP, a premium for many FCF-generating and higher-growth e-comm peers.” , the note said. The analyst believes Vroom needs to slow its cash burn, navigate a recessionary environment and get closer to profitability, allowing investors to regain confidence in investing in the stock. Until then, the company favors traditional brick-and-mortar car dealerships, that generate strong free cash flow – CNBC’s Michael Bloom contributed to this report.
https://www.cnbc.com/2022/08/15/sell-beaten-down-vroom-as-theres-no-quick-fix-for-online-car-retailer-in-a-slowdown-jpmorgan-says.html Sell run-down Vroom as online auto dealers have no quick fix in a downturn, says JPMorgan
