It’s been a while since we last talked about VRM and despite receiving lots of hate emails, we have to let you know that we were right about this company. When we posted a blog about our pessimistic view of this company, it was trading around $17. Where is it right now? $2.98. Yes, that’s not a typo. $2.98.
$VRM was trading as high as $65.01 more than a year ago and lost 93% of their value under the bad management. I am surprised that no activists have taken a stake and replaced the whole management team. In a meeting with Paul Hennessy, he openly criticized $CVNA on their inability to turn in profit and lack of cost control but the latest earnings report from $VRM shows that they lost more money that what the street expected. One article got even more pessimistic and gave $VRM a junk status.
So congratulations to those who followed our play and made a ton of money shorting or taking a short position. Hope we helped generate several millionaires (maybe a wishful thinking).
Now the questions are
- Can $VRM go any lower?
- With market cap of less than $500 million, is this becoming an acquisition target?
- If so, who would buy it? CarMax ($KMX)? AutoNation ($AN)? Asbury Automotive ($ABG)?
- Or would someone like Carl Icahn take a stake and turn the company around?
We believe once it hits $2 or below, it becomes an attractive target. Maybe even at the current price, it might be quite attractive to some PE or one of these companies above who want to get into online business. So we have exited our short position and we are slowly accumulating shares and you should consider doing so as well.
Again, before you do anything, do your own DD.