Vroom Delivers Mixed Q2 Results & Guidance: Shares Slip 1.7% After-Hours

Vroom, Inc. (VRM), an e-Commerce platform for buying and selling used cars, delivered mixed second-quarter results with revenue outpacing consensus estimates and losses falling in line with expectations.

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The company provided third-quarter loss guidance far wider than the consensus, while revenue forecasts exceeded expectations. Following the news, shares slipped 1.7% in after-hours trading on August 11. (See Vroom stock charts on TipRanks)

In the second quarter, the company reported a loss of $0.48 per share, in line with the consensus estimate. Vroom recorded a loss of $2 per share in the year-ago period.

Revenue climbed a whopping 201% to $761.89 million and significantly outpaced consensus estimates of $637.99 million.

Compared to the prior-year period, Vroom’s e-Commerce units sold grew 172% to 18,268 units, and e-Commerce segment sales grew 230% to $579.7 million. The robust growth in e-Commerce was driven by higher inventory levels, increased marketing spends, strong market demand for used vehicles, and further process improvements on Vroom’s e-Commerce platform.

Commenting on the quarterly results, CEO Paul Hennessy said, “Moving forward, we intend to continue to scale our capacity and efficiency ahead of growing demand with investments across our business, particularly in logistics, where we are ahead of schedule compared to our initial targets.”

Hennessy added, “We will also continue to strive for a frictionless e-Commerce checkout experience to drive a compelling customer proposition and improved unit economics over time.”

Based on its robust reported quarter performance, Vroom expects to achieve triple-digit year-over-year growth in sales in its e-Commerce unit for full-year 2021.

Additionally, for the third quarter, the company projects revenue to fall in the range of $858 – $891 million, and a loss per share of $0.78 – $0.73.

Consensus estimates for third-quarter revenue and loss per share are pegged at $690.6 million and $0.47 per share, respectively.

In response to the solid e-Commerce segment performance, Wells Fargo analyst Zachary Fadem reiterated a Buy rating on the stock with a price target of $60, implying 58.1% upside potential to current levels.

Fadem notes, “VRM is a high growth online platform with the potential to disrupt and gain share in the large ($840B+) and highly fragmented used auto market.”

The analyst attributes robust double-digit unit growth, improving unit economics, and accelerating online adoption drive for his optimistic outlook for the company.

Vroom’s shares have lost almost 45% over the past year, yet the stock commands a Strong Buy consensus rating based on 6 Buys and 1 Hold. The average Vroom price target of $55.14 implies 45.3% upside potential to current levels.