Shares of Vroom plunged 19.5% in extended market trading on Wednesday after the online car retailer provided a disappointing 3Q outlook.
Vroom (VRM) anticipates 3Q revenues to come in the range of $268 million to $290 million, missing analysts’ expectations of $344.6 million. For the quarter, the company projects a loss per share of between $0.37 and $0.42, which is wider than the Street estimate of $0.32.
Meanwhile, the company reported better-than-expected results for 2Q. Vroom’s revenues of $253.1 million surpassed the Street forecast of $234.9 million. Adjusted loss per share of $0.34 was narrower than analysts’ expectations of $0.70.
On July 8, JPMorgan analyst Rajat Gupta initiated coverage on the stock with a Hold rating and a price target of $55 (20.3% downside potential). Gupta sees “clear positives in the company’s likely double-digit unit growth for the next five years as well as the potential for a significant improvement in unit economics over time.” However, he cautioned about “elevated execution risk stemming from Vroom’s reliance upon third-parties for key operational aspects such as vehicle reconditioning and logistics.”
Currently, VRM has a Moderate Buy analyst consensus. The average price target of $63.11 implies downside potential of 8.6% to current levels. (See VRM stock analysis on TipRanks).
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