Technology

Online used car seller Vroom’s shares surge 83% in debut

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(Reuters) – Shares of online used car seller Vroom Inc soared nearly 83% in their market debut on Tuesday, as the U.S. IPO market roars back to life after the coronavirus crisis slammed the brakes on new listings.

Shares opened at $40.25, giving the company a market value of $4.54 billion.

The IPO was priced at $22 apiece on Monday, above the upwardly revised range of $18 to $20, and sold 21.25 million shares compared with the earlier plan of 18.8 million shares.

The blockbuster listing highlights the strong appetite for new stock offerings, as well as healthy demand for online-focused companies against the backdrop of the COVID-19 pandemic.

Some eight companies completed their IPOs last week with all deals pricing either at or above their target ranges or increasing the size of the offering, the first time that eight IPOs in a week managed to get such a strong reception, according to Renaissance Capital, which tracks IPOs.

Royalty Pharma, which buys biopharmaceutical royalties, unveiled plans on Monday to raise up to $1.96 billion in an IPO, which could make it the biggest U.S. listing of the year so far.

Vroom’s listing comes as auto retailers increasingly turn to e-commerce to close deals without a handshake and arrange for vehicles to be picked up or delivered without requiring customers to visit stores.

Last week, Vroom lifted its price range to $18-$20 per share from $15-$17.

The company reported a more than two-fold rise in sales at its e-commerce business in the first quarter of 2020.

Revenue in the quarter jumped 60% from a year earlier, while net loss attributable to Vroom’s common stockholders narrowed to nearly $41.1 million from $45.1 million.

Reporting by C Nivedita and Abhishek Manikandan; Editing by Sriraj Kalluvila

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