Vroom, Inc. VRM saw its shares take a sharp downturn in Monday’s after-hours session following the company’s announcement that it has opted to discontinue its used vehicle dealership operations.
What Led to This: Vroom made public the decision to cease operations after the close of the market on Monday, causing a rapid drop in its shares by over 50%. The motive behind this move is to “preserve liquidity and enable the company to maximize stakeholder value through its remaining businesses.”
The company’s board of directors greenlit the Value Maximization Plan, which entails Vroom ceasing transactions via vroom.com, liquidating its existing used vehicle inventory through wholesale channels, terminating the acquisition of additional vehicles, and carrying out a workforce reduction in sync with its reduced operations.
Thomas Shortt, Vroom’s CEO, remarked, “As we previously disclosed, we intended to raise additional capital to fund our operations and support the extension of our vehicle floorplan facility beyond its current expiration date of March 31, 2024. Despite significant efforts to do so, we ultimately were unable to raise the necessary capital in the current market.”
“Obviously, we are very disappointed with this outcome. Two years ago, we set out to build a well-oiled machine, improve unit economics and dramatically enhance our customer experience, and I believe we achieved those goals. I want to thank our dedicated Vroommates, customers, and business partners, as well as our board of directors and investors, all of whom have supported us over the years.”
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VRM Price Action: Vroom’s shares were down 55.67% at $0.23 in after-hours trading at the time of publication, according to Benzinga Pro.
Photo: Oleg Gamulinskii from Pixabay