Vroom, the parent company of automotive financing group United Auto Credit Corporation (UACC), faces a reckoning when US markets open on Tuesday.
Its market value was effectively slashed in half in pre-market trades after the Houston-based business announced that its ecommerce platform for buying and selling used vehicles is to be shuttered.
Vroom was seeking to raise capital to support this arm of the business but was ultimately unable to secure the necessary funding.
As a result, the company is suspending all transactions through vroom.com, is seeking to dispose of existing inventory, and is cutting its workforce to reflect these changes.
“Obviously, we are very disappointed with this outcome,” said Thomas Shortt, the company’s chief executive officer.
He continued: “Two years ago, we set out to build a well-oiled machine, improve unit economics and dramatically improve our customer experience and I believe we achieved those goals.
“I want to thank our dedicated Vroommates, customers and business partners, as well as our board of directors and investors, all of whom have supported us over the years.”
The board intends to concentrate its focus on UACC and the CarStory analytics and digital services offering.
Robert Mylod, independent executive chair of the board, commented: “Although we were unable to raise the capital necessary to achieve profitability in our ecommerce operations, we are committed to responsibly managing our remaining businesses and prudently deploying our capital as we seek to maximize value for all of our stakeholders.”
Shares were seen 51% lower in pre-market trades.