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Vroom Stalls as Quarterly Loss Sparks Analysts to Drop Price Targets

Vroom shares plunge after the online used-car seller posts a wider-than-expected fourth-quarter loss, in turn sparking Wall Street analysts to lower their price targets.

Vroom  (VRM) - Get Vroom Inc. Report shares stalled on Thursday, with the all-online used-car seller’s stock plunging nearly 25% after the company reported a wider-than-expected fourth-quarter loss, which in turn sparked Wall Street analysts to lower their price targets.

Vroom posted fourth-quarter revenue that beat analysts' estimates but fell short on earnings and its outlook. The online dealer of used cars reported an adjusted loss of 44 cents a share on revenue of $405.8 million.

Analysts polled by FactSet had expected Vroom to report a loss of 37 cents a share on revenue of $401.2 million.

The disappointing results and expectations of further earnings pain prompted analysts to lower their price targets on Vroom, even as the company continues to show its stripes in the fast-growing market of buying and selling used vehicles entirely online.

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The shortfall was due to execution issues, including “temporary disruption caused by investments to rapidly scale, an issue that also plagued Carvana  (CVNA) - Get Carvana Co. Class A Report soon after becoming public in 2017,” Jefferies’ analyst John Colantuoni wrote in a note to clients.

He lowered his one-year price target to $43 from $45 and maintained his hold rating on the stock.

Piper Sandler’s Alexander Potter slashed his one-year price to $60 from $75, saying Vroom is becoming a “show me” story, even as the drop in quarterly revenue mostly reflected in his view “self-inflicted execution issues that impacted gross profitability.” He maintained his buy rating.

Baird analyst Colin Sebastiam, meantime, lowered his one-year price target to $44 from $49, noting that he would be “surprised if Vroom misses its first-quarter guidance with only 28 days left in the quarter.” He held on to his outperform rating on the shares. 

At last check, Vroom shares were down 24.07% at $33.33.