- Vroom’s (VRM) recently posted financial stats aren’t perfect, but they offer hope to patient investors.
- Meanwhile, a C-suite change should shake things up at Vroom in a good way.
- Investors should take a small stock position in VRM stock as the company attempts to stage a major turnaround.
Based in New York, digital car-buying platform Vroom (NASDAQ:VRM) offers a modern alternative to old-school automotive shopping experiences. VRM stock isn’t in great condition and is definitely a fixer-upper, but if Vroom can successfully reinvent itself, the potential for upside is strong.
Car buying and e-commerce: it’s a perfect combination, right? This makes sense in theory, but in practice, Vroom’s long-term investors are still waiting to break even.
Also, the investors are undoubtedly hoping that Vroom is steering toward profitability. Thankfully, the company’s fiscal data offers hope while a new chief executive could put Vroom back on track.
What’s Happening with VRM Stock?
Taking it back to the beginning, Vroom went public at $22 per share and soon shot up above $50. After that quick burst of enthusiasm, however, it was all downhill from there.
Not long ago, the Vroom share price touched the $1.50 level, leaving investors to wonder whether $5 or $10 was just a fantasy. These price targets could become a reality, though, as Vroom has announced a major change.
Reportedly, Tom Shortt is replacing Paul Hennessy as Vroom’s CEO. Shortt previously served as Vroom’s Chief Operating Officer (COO).
Vroom Board Chair Robert Mylod called Shortt a “transformational leader,” which is exactly what the company needs now. Mylod added that Shortt “is now relentlessly focused on putting Vroom on a path that will yield significant operating efficiencies through increased automation.”
New Man, New Plan
There’s also a new plan afoot, which, as InvestorPlace contributor Mark R. Hake reported, involves “right-sizing the organization through a workforce reduction.”
It’s unfortunate that some employees will probably lose their jobs due to “increased automation,” but Vroom’s bottom line could benefit from this type of cost cutting.
Furthermore, Vroom’s stakeholders should be glad to know that the company’s first-quarter 2022 results showed some improvement. Specifically, Vroom reported e-commerce revenue of $675.4 million, up 60% year-over-year.
Turning to the bottom line, Vroom recorded a Q1 2022 net earnings loss of 71 cents per share. Losses aren’t typically regarded as a good thing, but there’s a silver lining here. Notably, Vroom’s result beat the analysts’ consensus estimate of a $1.03 per share loss.
What You Can Do Now With VRM Stock
In a perfect world, Vroom would have reported a profit in 2022’s first quarter. This didn’t happen, but the company’s better-than-expected result should offer some encouragement.
Besides, Vroom’s transitional period is just getting under way. So, investors should be patient and consider holding VRM stock as it zooms ahead with a new CEO — and, we can hope, strong results in the near future.
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On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.