Vroom, the auto sales platform, expanded its initial public offering and priced its shares above the previous set range to target the growing appetite of investors for IPOs.
The company announced to list shares at $22 each, which is above the targeted range of $18 to $20 that has been increased a week prior. Vroom is set to sell 13% more shares (from 18.75 million), totaling its listing to over 21 million shares and valuing the company at $2.48 billion.
Accordingly, Vroom share sales will raise around $470 million (before investment fees).
Vroom is a venture-backed car sales platform that sells new and reconditioned cars as well as car parts. Its backers include L Catterton, General Catalyst Partners, and T. Rowe Price Associates Inc.
Vroom reported a $27.1 million net loss in the first quarter of 2020, a decrease from the $41.1 million net loss in the same quarter of 2019. Its revenue jumped to $375.8 million from $235.1 million a year ago.
In its filing, the company states that its revenue came primarily from retail vehicle sales, which accounted for $308.7 million in the first quarter.
“Our ability to continue as a going concern is dependent upon us generating sufficient cash flow from operations and obtaining additional capital and financing, including the proceeds from this offering,” said Vroom via Financial Times.
Vroom’s IPO demand is fueled by the buyer’s shift to shopping cars online amidst the pandemic. CarGurus survey published in April showed 61% of respondents agreed to buy cars online, which is 29% higher before the Covid-19 pandemic.