It’s fair to say CarLotz’ (LOTZ) short time on the public markets has amounted to a rough slog. Shares are down by 37% since the consignment-to-retail business’ January debut. However, that dispiriting figure looked a lot worse before the past week’s 43% surge.
The change in sentiment could be down to a combination of retailers taking a shine to this stock while a recent positive announcement has helped too. Earlier this week, the company announced it has opened a new hub in Charlottesville, Virginia. It is the fourth hub to open in CarLotz’s home state and the 12th across the nation.
Barrington’s Gary Prestopino says there are more to come and believes the company will open between 14 to 16 new hubs this year. By the end of 2023, the company intends to have at least 40 hubs.
“An expanded hub footprint should facilitate growth in supply from national corporate vehicle sourcing partners that was previously unavailable due to geographic limitations,” the 5-star analyst opined.
The company’s tough time in the stock market has coincided with headwinds for its business. Last month, CarLotz cut back its revenue outlook for the year along with vehicles sold and gross profit estimates due to a pause on consignments from its largest commercial vehicle sourcing partner.
However, Prestopino finds a lot to like about CarLotz. For one, it is the industry’s only consignment-to-retail sales model for corporate and individual consigners. And through this model, CarLotz has “opened” the retail market to both.
And because consigned vehicles make up on average roughly 90% of its vehicle inventory “at mature hub locations,” the company procures non-competitively sourced inventory with “little to no capital tied up or at risk.”
This sourcing model, say Prestopino, is “both a differentiator and a competitive advantage for the company, eliminating wholesale auction fees in obtaining vehicles and minimizing floor plan financing costs for inventory.”
The company also has a competitive advantage due to its technology platform. For corporate consigners, it provides a wealth of useful information, while for retail buyers, the technology platform delivers a “fully digital, end-to-end e-commerce platform for every step in the vehicle selection, financing and checkout process.”
So, that’s good news for vehicle buyers and sellers, but what does it all mean for investors? All in all, Prestopino has an Outperform (i.e. Buy) rating for LOTZ shares, backed by a $16 price target. Upside from current levels is a strong ~146%. (To watch Prestopino’s track record, click here)
One other analyst has recently reviewed CarLotz’ prospects, and with the extra Buy, the stock has a Moderate Buy consensus rating. (See CarLotz stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
