Vroom, the online used-car sales startup, is eyeing an initial public offering (IPO) for June of this year, according to sources familiar with the company’s inner-workings, The Wall Street Journal reported.
That comes even during the time of social distancing, with car sales and associated businesses lagging in business. Online car retailers may have the leg up in the pandemic, however, as people resort to more digital methods of purchasing in lieu of being able to go out.
And Vroom’s chief rival Carvana, a better-known entry in the online car space, has seen its shares creeping back up after initially falling during the pandemic’s early days.
The chief difference between Vroom and Carvana, though, comes from Vroom’s diversity in sales — Carvana made all of its money selling online, while Vroom made a sizable chunk of its sales from traditional car dealers it has a stake in, or on the wholesale market. But the stock market has rated Carvana’s majority-digital approach higher than traditional car dealers by a lot.
Vroom CEO Paul Hennessy told PYMNTS CEO Karen Webster recently that the effect on his business had been a “small chilling effect,” but not a total shutdown as it has been for others.
Instead, Hennessy said people have still been engaged in buying and selling cars during the shutdown, saying digital “does exactly what it needs to do” during the quarantine by delivering straight to their driveways.
He credited that to the extra time many buyers and sellers had on their hands — contrary to the initial expectation that the virus would stifle their appetites.
It’s unknown what valuation Vroom plans to go for, though the company raised $250 million in a private funding round last December. That round valued the company at $1.5 billion.
Vroom’s projections for 2021 have gone down since the pandemic has set in. Before, the company was predicting a $3.2 billion bounty; now it is only forecasting $2 billion, with the bulk coming from online sales. But even the $2 billion mark would put it closer to Carvana’s $3.9 billion in sales from 2019.