NEW YORK (TheStreet) -- Shares of (TRUE) - Get Report have been an ugly mess this year, falling 78% to an intraday low of $5.07 on Friday from $23 at the beginning of the year.

Despite the stock's decline, the business situation is actually looking quite good for TrueCar, and the company's shares are a compelling bargain below the $8 to $10 range.

On Thursday, TrueCar -- which provides prices and other information about cars online -- reported its second-quarter results, which met the company's forecast, which it had lowered on July 23. On that day, TrueCar lowered its revenue estimate for the second quarter by $3 million to $65 million to $65.3 million and lowered its estimate for adjusted earnings, before interest, taxes, depreciation and amortization to $300,000, which was $200,000 below its previous forecast.

TrueCar's stock plunged 35% to $6.90 from $10.68 on the revised estimates, and then dropped another 25% last Thursday after the company's co-founder and CEO, Scott Painter, announced unexpectedly in the earnings release that he is resigning later this year. He will remain chairman.

And the yet the stock rebounded from its lows on Friday to close at $5.76, up 4% on the day and up 14% from the intraday low as investors may have realized that Painter's resignation could actually be the cure to what ails TrueCar.

On the earnings call, Painter himself recognized that he was likely the source of some confrontation between TrueCar and its dealer partners. He also acknowledged that his abilities as an entrepreneur had not necessarily translated into the needed skills of a CEO for a more established company.

This stock's sharp rebound on Friday may indicate that the bottom has been reached and that there may be substantial upside in the near term.

TrueCar's biggest failure has been that it has over-promised and under-delivered for the past year. Wall Street has been brutally unforgiving, punishing the stock accordingly. Yes, it is true that TrueCar has not met the overly high expectations. But at the same time, the company is showing strong growth, which is not reflected in the current stock price.

Here are four reasons to expect TrueCar's stock to rebound to $8 to $10 in the near future.

First, massive growth in unit volume. TrueCar's certified dealers sold 190,358 cars and trucks listed on TrueCar's Web site or mobile app in the second quarter, up 27% from the same quarter earlier, compared with overall auto market growth of 4% during that time. Dealers in TrueCar's network include any dealership that lists its inventory on TrueCar's Web site and mobile app.

Second, despite rapid growth, a huge market remains. TrueCar has already secured an impressive foothold in the market, with 4% of all new-car sales in the U.S. in the second quarter coming through TrueCar's online platform. While that number is big, it still leaves a lot of room for TrueCar to grow.

Third, other metrics indicate growing traction with users and dealers. TrueCar had 4.2 million unique visitors to its Web site or app in the second quarter, up 64% from a year earlier. On the dealer side, TrueCar's network exceeds 10,000 dealers in the U.S., with 9,300 franchise dealers and 1,802 non-franchise dealers as of June 30.

Fourth, TrueCar is close to a significant financial inflection point. To date, TrueCar has been consistently in negative Ebitda territory, although it has gotten to roughly break-even. But by year's end, TrueCar is now forecasting $5 million in positive Ebitda.

For the second quarter, TrueCar posted a GAAP net loss of $14.7 million, but $9.2 million of that was due to non-cash stock-based compensation. As that pay decreases, TrueCar will get closer to a profit on a GAAP basis.

Overall, TrueCar has been smacked for falling short of its projections, but the stock is being punished so badly that it is downright irrational. TrueCar's market capitalization has fallen to $490 million down from more than $2 billion at the beginning of the year, even though the company has more than $125 million in cash and is set to post annual revenue of over $250 million.

The rebound off the lows on Friday indicates that we have likely seen a final capitulation by the most frustrated investors who had lost patience with TrueCar. The sellers at any price are now gone, clearing the way for TrueCar to move sharply higher. 

At a minimum, when TrueCar announces a new CEO, expect to see a sharp bounce. And in the meantime, the stock remains deeply undervalued.

This article is commentary by an independent contributor. At the time of publication, the author was long TRUE.