Vroom Feels the Heat — Is It Going Out of Business?
With competitors such as Carvana or Carfax continuing to gain popularity, is Vroom going out of business? Here's what we know about the company.
Vroom considers itself to be one of the leading e-commerce platforms for used motor vehicle sales. The company provides a digital marketplace for buying and selling cars without consumers having to physically participate in the process. With competitors such as Carvana or Carfax continuing to gain popularity, is Vroom going out of business?
The online used car retailer has been rumored to be going out of business, though future plans may say otherwise. Here's what we know about the company.
Who is the CEO of Vroom?
As of May 9, 2022, Tom Shortt was appointed as the CEO of Vroom by the company's Board of Directors. His promotion followed the departure of former CEO Paul Hennessy. Shortt's new role was met with praise from Independent Executive Chair of the Board Robert Mylod. "Shortt is a transformational leader who has already made a huge impact on our business and operations since he joined Vroom," Mylod said in a statement. He said that Shortt's past experience was necessary for Vroom's future.
Shortt previously worked in other "presidential" roles at companies such as The Home Depot and Walmart before he joined the Vroom team in 2022. Even if Vroom is at risk of going out of business, there's still room for the CEO at the company. Shortt's current net worth in 2023 is estimated to be $1.53 million, according to Wallmine.
Is Vroom in financial trouble?
Vroom has faced declining consumer interest over the years. Despite their initial launch in 2013, Vroom became more apparent in the public eye during the COVID-19 pandemic. With mitigations around social distancing now lifted in most places, is Vroom going out of business? Vroom earned $1.2 billion in revenues in 2019 with earnings plummeting since. The online used car retailer's lack of earnings supports the rumors that the company is at risk of going out of business.
Reports in early 2022 claimed that in Q4 of 2021, the gross profit dropped to $473, which isn't a promising shift from the Q4 2020 gross profit report of $878. Vroom's financial situation saw their entire Q4 2021 at a $130 million loss overall and would need to increase capital by mid-2023 in order to successfully stay in business.
What is Vroom worth?
Vroom is currently worth $136.76 million with Vroom shares currently retailing at $0.99 on March 1, 2023. Vroom's enterprise value sits at $455.87 million, though the intense hit of $606.47 million in losses against $2.67 billion in revenue questions the financial situation of the online used car retailer. Even with a prior market cap of $146.46 million, Vroom's lack of success as a business has contributed to the rumors becoming more believable. Some are left to speculate that Vroom may shut down altogether.
Vroom itself hasn't come forward to announce that they're considering closing or going out of business. While people want to know if the company is going out of business, we don't have a concrete answer yet. Vroom hasn't disclosed it future plans. For now, Vroom isn't going out of business but only time will tell.