Shares of Vroom (NASDAQ: VRM) nosedived 51% in the extended trading Monday after the company disclosed its decision to wind down its e-commerce used vehicle operations.
Vroom (NASDAQ: VRM) has declared the termination of its e-commerce activities and the gradual shutdown of its used car dealership business to conserve liquidity and optimize stakeholder value through its remaining enterprises. Vroom is the parent company of United Auto Credit Corporation (UACC), a prominent auto finance company, and CarStory, a frontrunner in AI-driven analytics and digital services for car retail. Both UACC and CarStory will persist in catering to their third-party clients and concentrate on expanding these businesses.
As part of the Value Maximization Plan sanctioned by Vroom’s Board of Directors, the company is putting a halt to transactions on vroom.com, intending to offload its existing used car inventory via wholesale channels, stopping the acquisition of more vehicles, and implementing a workforce reduction in line with its scaled-down operations.
Thomas Shortt, the CEO of the company, stated,
“We had previously revealed our intention to secure additional funding to sustain our operations and extend our vehicle floorplan facility beyond its current expiry date of March 31, 2024. Despite our best efforts, we were unable to procure the required capital in the present market. Naturally, this outcome is a source of great disappointment. Two years ago, we embarked on a journey to construct an efficient system, enhance unit economics, and significantly improve our customer experience, and I believe we accomplished those objectives. I would like to express my gratitude to our devoted Vroommates, customers, and business associates, as well as our Board of Directors and investors, who have all been supportive throughout the years.”
Robert Mylod, the Independent Executive Chair of the Board, remarked,
“Even though we were unable to secure the necessary funding to attain profitability in our ecommerce operations, we are dedicated to responsibly managing our remaining businesses and judiciously utilizing our capital as we strive to maximize value for all our stakeholders.”
Following a 20.28% surge in the regular trading session, VRM stock plummeted 51.14% in after-hours trading on Monday.
