Auto sales platform Vroom Inc. more than doubled in its trading launch after racing past its previous goals for its initial public providing to raise $468 million.
Shares of the company, whose backers include L Catterton, General Catalyst Partners, and T. Rowe Price Associates Inc., increased 117% to $47.90 in trading Tuesday, giving it a market value of about $5.4 billion.
Vroom, which sells used vehicles online, moved up the cost of the IPO to Monday after earlier preparing to sell the shares on Wednesday. It sold 21.25 million shares for $22 each, after marketing 18.75 million for $18 to $20, a range that had already been boosted earlier.
“Investors recognize that this is a sector that really is poised for material growth on the online side,” said Michael Farello, a managing partner at L Catterton. “The company is truly ready to put the accelerator down and focus on growth.”
While demand for used vehicles has softened at the national level, Vroom sold more units in March and April this year compared to any prior two-month period, the filings show.
Although the IPO market heated up last week with over $7 billion raised worldwide, venture-backed listings had been largely missing in action. ZoomInfo Technologies Inc., the business intelligence company whose IPO raised $935 million on Wednesday, was the first technology listing in the U.S. since Chinese cloud service provider Kingsoft Cloud Holdings’ IPO in April. ZoomInfo’s backers consisted of TA Associates and Carlyle Group Inc.
New York-based Vroom experienced 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 earnings for the same period last year.
The COVID-19 pandemic might spur more car consumers to shop online, Vroom noted in its filing. According to a CarGurus survey in April, 61% of respondents were open to purchasing a vehicle online, compared with 32% before the pandemic, Vroom stated.
Goldman Sachs Group, Bank of America, Allen & Co., and Wells Fargo & Co. led the offering. Vroom’s shares are trading on the Nasdaq Global Select Market under the symbol VRM.
