Vroom, the US-only online used cars platform, has successfully raised $467.5 million in an oversusbcribed IPO, the company announced today. The IPO, which comes amid COVID-19 impacted global economy, was priced at $22 a share. Vroom was valued at $2.5Bn in the IPO.
COVID-19 and its resultant economic impact seemed to have little to no effect on Vroom’s IPO, as investors believe buyers could rapidly shift to used cars with lesser money to spend post COVID-19. The company said it sold 21.25 million shares compared with the earlier plan of 18.8 million shares.
Vroom, which sells used and new vehicles as well as car parts, moved up the pricing of the IPO to Monday after earlier planning to sell the shares on Wednesday. The company had announced its IPO last month.
The successful money raise for Vroom comes even when losses have widened for the company in recent years. The company had a net loss of $41 million on revenue of $376 million for the three months ended March 31, compared with a loss of $27 million on $235 million in revenue for the same period last year.
However, with people expected to have lesser cash to spend on luxury buys such as new cars, prospects of them turning to Vroom for used-cars, are high. And that is what investors seem to be banking upon. The impact has already started to show up. Vroom reported a more than twofold rise in sales at its e-commerce business in the first quarter of 2020, as people rush to online shopping for all sorts of buys. Revenue for the first quarter ended March 31 jumped 60% from a year earlier.
Vroom’s IPO is one among a series of planned tech IPOs on the US, as people begin to realise the ‘living-with-COVID’ situation and world’s largest economy begins to ease up. Last Wednesday, business intelligence platform ZoomInfo Technologies Inc. too raised $935 million in a successful IPO. ZoomInfo’s IPO was the first in a post-COVID economy, and a boon for tech IPOs. According to data available at Crunchbase, Vroom has raised over $440 million in Venture Capital and Private Equity till date.
An earlier version of the story mentioned Zoom (the Video conferencing company) instead of ZoomInfo in Para 6. The error has been corrected.
