Important points
- Bloom said it plans to discontinue its e-commerce business and downsize its used car dealerships.
- The company said it has not been able to raise the funds it needs to finance its e-commerce business.
- The stock price will fall sharply on this news, potentially breaking out of the descending wedge pattern and hitting a new all-time low.
Bloom Co., Ltd.
Source: TradingView.com
Shares of automotive e-commerce platform Vroom (VRM) rose in trading on Tuesday after the company announced plans to discontinue its e-commerce business and scale back its used car sales business to strengthen and maximize liquidity. It plunged more than 50% ahead of the opening bell. Stakeholder value.
The company said it had attempted to raise capital for its e-commerce business in recent months, but was unable to secure sufficient capital under current market conditions. “As previously disclosed, the Company intended to raise additional capital to fund operations and support the expansion of its vehicle floorplan facility beyond its current expiration date of March 31, 2024. .Despite significant efforts to do so, we were ultimately unable to raise capital,” Bloom CEO Thomas Short said in a statement. “It is clear that we do not have the necessary capital,” he said, adding, “Obviously, we are very disappointed with this outcome.”
The company said it plans to continue operating its auto financing business, United Auto Credit Corporation (UACC), and CarStory, its artificial intelligence-powered analytics service for auto retailers. In addition, Bloom said it plans to sell used vehicles through wholesale channels, stop purchasing additional vehicles, and reduce its workforce to accommodate business downsizing.
Despite a 20% rebound from the lower trendline of the descending wedge in Monday's trading, Bloom's stock is likely to fall well below the stock price pattern today following the company's announcement, potentially sending it to an all-time low. A close near the day's low, supported by volume, could signal further selling ahead, while a strong intraday reversal could change the sentiment surrounding the stock.
Bloom's stock price has fallen 44% in the past 12 months and is down more than 12% since the beginning of the year.
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