$VRM Riding The Wave
Up 46% with the Carvana (NYSE: CVNA) rally, Vroom, Inc. (NASDAQ: VRM) seems to be in a good position, especially since used car prices increased in April. Furthermore, with the FOMC approaching and the expectations that the Fed is going to pause rate hikes VRM can expect to increase its sales with the improving macroeconomic climate. VRM is also working on reducing its inventory of aged cars since it has a significantly lower gross profit per unit (GPPU) for non-aged cars which could have a positive impact on the VRM stock price given the potential revenues the company can realize.
VRM Fundamentals
Market Resurrection
This month seems to be a good month for used car retailers with CVNA stock and VRM stock both being up 64% and 46% respectively since the start of the month.
The increase in VRM stock value can be attributed to the improved outlook for the used cars market after Carvana released an improved financial outlook for its Q2. It is also worth mentioning that used cars’ CPI increased in April by 4.4% after it has been declining for 9 months straight.
With the Federal Open Market Committee (FOMC) meeting approaching and the general consensus that the Fed is going to pause the interest rate hikes, VRM can benefit greatly from this as customers will now be more willing to buy used cars especially since new cars prices have been increasing at a higher rate.
New Strategy
VRM is looking to shift its sales from aged vehicles to unaged vehicles that it has held for less than 180 days since aged vehicles are holding VRM’s GPPU back at around $2,552 while unaged vehicles’ GPPU was around $4,200, which is a 65% increase. Because of that, VRM is looking to decrease its inventory of aged vehicles in the first half of 2023 as it obtains titles for cars that previously were not listed for sale, with the second half seeing a relatively better GPPU as unaged vehicle sales increase.
VRM Financials
In its Q1 2023 report, VRM’s assets increased 2% QoQ from $1,619 million to $1,651 million, and its cash and cash equivalents decreased 19% QoQ from $390 million to $316 million. VRM’s total liabilities increased by 9% QoQ from $1,143 million to $1,249 million.
Revenue decreased 79% YoY from $923 million to $196 million. Operating costs decreased almost 169% from $397 million to $107 million, which contributed to the operating loss decrease of 78% YoY from $315 million to $68 million, which amounted to a net loss of $75 million – a 75% decrease YoY.
Technical Analysis
VRM stock’s trend is bullish with the stock trading in an upwards channel. Looking at the indicators, the stock is trading above the 200, 50, and 21 MAs which are bullish indications. Meanwhile, the RSI is neutral at 62 and the MACD is approaching a bearish crossover.
As for the fundamentals, VRM stock just witnessed a catalyst in CVNA’s improved financial outlook for Q2, since it improved the outlook for the used cars market as a whole. The FOMC meeting on 14 June will be a future catalyst for VRM stock as it will determine whether demand for used cars will increase or not.
VRM Forecast
VRM stock is looking like it is riding the wave that Carvana created for the used cars market with its improved Q2 financial outlook. Furthermore, used car prices are increasing which could mean that used car retailers could realize more revenues. With the upcoming FOMC meeting, more customers could be willing to purchase cars since it is expected that the Fed will pause rate hikes for June, and with the steep rise in new vehicle prices, used cars could be a good alternative.
VRM Fundamentals
Market Resurrection
This month seems to be a good month for used car retailers with CVNA stock and VRM stock both being up 64% and 46% respectively since the start of the month.
The increase in VRM stock value can be attributed to the improved outlook for the used cars market after Carvana released an improved financial outlook for its Q2. It is also worth mentioning that used cars’ CPI increased in April by 4.4% after it has been declining for 9 months straight.
With the Federal Open Market Committee (FOMC) meeting approaching and the general consensus that the Fed is going to pause the interest rate hikes, VRM can benefit greatly from this as customers will now be more willing to buy used cars especially since new cars prices have been increasing at a higher rate.
New Strategy
VRM is looking to shift its sales from aged vehicles to unaged vehicles that it has held for less than 180 days since aged vehicles are holding VRM’s GPPU back at around $2,552 while unaged vehicles’ GPPU was around $4,200, which is a 65% increase. Because of that, VRM is looking to decrease its inventory of aged vehicles in the first half of 2023 as it obtains titles for cars that previously were not listed for sale, with the second half seeing a relatively better GPPU as unaged vehicle sales increase.
VRM Financials
In its Q1 2023 report, VRM’s assets increased 2% QoQ from $1,619 million to $1,651 million, and its cash and cash equivalents decreased 19% QoQ from $390 million to $316 million. VRM’s total liabilities increased by 9% QoQ from $1,143 million to $1,249 million.
Revenue decreased 79% YoY from $923 million to $196 million. Operating costs decreased almost 169% from $397 million to $107 million, which contributed to the operating loss decrease of 78% YoY from $315 million to $68 million, which amounted to a net loss of $75 million – a 75% decrease YoY.
Technical Analysis
VRM stock’s trend is bullish with the stock trading in an upwards channel. Looking at the indicators, the stock is trading above the 200, 50, and 21 MAs which are bullish indications. Meanwhile, the RSI is neutral at 62 and the MACD is approaching a bearish crossover.
As for the fundamentals, VRM stock just witnessed a catalyst in CVNA’s improved financial outlook for Q2, since it improved the outlook for the used cars market as a whole. The FOMC meeting on 14 June will be a future catalyst for VRM stock as it will determine whether demand for used cars will increase or not.
VRM Forecast
VRM stock is looking like it is riding the wave that Carvana created for the used cars market with its improved Q2 financial outlook. Furthermore, used car prices are increasing which could mean that used car retailers could realize more revenues. With the upcoming FOMC meeting, more customers could be willing to purchase cars since it is expected that the Fed will pause rate hikes for June, and with the steep rise in new vehicle prices, used cars could be a good alternative.
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