WARNING: Market Shock Imminent

Join us on September 29 at 4 p.m. ET at the Market Shock 2022 event to find out what’s coming and how to profit.

Thu, September 29 at 4:00PM ET
 
 
 
 

Billionaire Andreas Halvorsen Is Betting Big on Cazoo (CZOO) Stock. Here’s Why.

  • Halvorsen purchased 60 million shares of Cazoo (NYSE:CZOO).
  • The fund manager now owns a 7.3% stake in the British car retailer.
  • Shares of CZOO stock are about 90% year-to-date.
CZOO stock - Billionaire Andreas Halvorsen Is Betting Big on Cazoo (CZOO) Stock. Here’s Why.

Source: Devina Saputri / Shutterstock

Shares of Cazoo (NYSE:CZOO) stock are in the spotlight following a massive purchase by Viking Global’s Andreas Halvorsen. The former Tiger Cub founded Viking in 1999 and today manages over $21 billion in 13F securities. Furthermore, the industry veteran has a net worth of about $6.6 billion.

The U.K.-based online car seller has had a rough year, to say the least. Shares of CZOO stock are down about 90% year-to-date (YTD), underperforming the S&P 500’s YTD loss of 21% by a wide margin. Earlier this month, the company announced that it would wind down operations across continental Europe and focus solely on the U.K. Cazoo had previously invested about $200 million across Spain, Germany and Italy, and had formed multi-year partnerships with European sports teams. The company is currently searching for ways to end several of its sports sponsorships.

The closing of operations across continental Europe will result in 750 job cuts, adding on to previous job cuts of the same amount. Afterward, Cazoo will still have around 3,000 employees. Now, Halvorsen is stepping in and taking an activist position in CZOO stock.

CZOO Stock: Andreas Halvorsen Purchases 60 Million Shares

As of June 30, Halvorsen owned zero shares of CZOO, so the fund manager purchased his entire stake during the third quarter. As of Sept. 7, Viking owns a total of 60 million shares, which is equivalent to a 7.3% ownership stake. Halvorsen also disclosed his position via a 13D form, which means that he seeks to take an activist stance in the company.

Viking has an average holding period of 5.46 quarters for stocks in its 13F portfolio. Still, it is probable that the fund will hold its CZOO position for longer than that due to its activist stance.

At first glance, the online car retailer’s Q2 earnings seem impressive. Revenue rose to $327 million, up 145% year-over-year (YOY). On top of that, vehicles sold increased 124% YOY to 23,955. However, under the hood was a $238 million loss for the six months ending June 30, more than doubling the loss of $100 million a year ago. In the same time period, gross margins declined to a minuscule 0.5%, compared to 4.6% a year ago. The decision to scale down operations in Europe is expected to save about $100 million by the end of 2023.

With margins, gross profit, and adjusted earnings before interest, taxes, deductions and amortizations (EBITDA) falling dramatically, Cazoo is in an extremely difficult spot. Still, the help of Halvorsen and Viking Global is ultimately a positive signal for the struggling car seller.

On the date of publication, Eddie Pan did not hold (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.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.


Article printed from InvestorPlace Media, https://investorplace.com/2022/09/billionaire-andreas-halvorsen-is-betting-big-on-cazoo-czoo-stock-heres-why/.

©2022 InvestorPlace Media, LLC