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.
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.