Online car retailer Cazoo Group Ltd (NYSE:CZOO) share price skyrocketed and then plummeted on the news that co-founder and chief executive Alex Chesterman will step down amid falling full-year sales and plans to cut staff.
Its shares were up some 9.3% as the New York market opened, but later fell some 15% as it forecast car sales to fall to between 40,000 and 50,000 units in 2023, down as much 38.5% from the 65,000 sold in 2022.
“We remain […] extremely mindful of the current economic environment,” Chesterman outlined, “our new 2023 plan, which includes more modest top line ambitions, ensures that we continue to improve.”
The plans will also see Chesterman, who also founded Love Film (bought by Amazon) and Zoopla (bought by Silver Lake), step back and become executive chairman, with the CEO role taken by current chief operating officer Paul Whitehead, in April.
Cazoo will focus on its unit economics, reducing fixed costs and conserving cash, as it aims to reach profitability without the need for fund raising, it outlined in a press release.
It will also lay off staff and close warehouses and customer centres as part of its “revised” cost-cutting measures, which has already seen it halt European operations following a £243mln loss in the first half of 2022.
"We also remain on track and on budget with our withdrawal plan from the EU, having disposed of our Italian and Spanish businesses and largely wound down our French and German operations in the fourth quarter," Chesterman added.
"We had another strong quarter of UK retail unit sales, up over 100% year on year, and we have now sold well over 100,000 cars entirely online in the UK in just 3 years since our launch," he said, hinting towards a so-far successful reshuffle by Cazoo to foucs on its British business.
Cazoo’s shares have called dramatically in value since the company was listed on the New York Stock Exchange in August 2021 by former owner Daily Mail and General Trust (LSE:DMGT).
Shares were initially valued at US$10 each, but have subsequently fallen to just US$0.31, seeing the company’s valuation fall from US$8bn to well below US$1bn.
Despite the hike in early trading on Wednesday, Cazoo shares later spiralled, falling 14.9% to US$0.26.