1) The used car industry is hot. Both Carvana and Carmax beat earning expectations (competitor used car dealers).
2) Visits to vroom.com is up over 170% YOY – with most of the traffic increase coming in Q2.
3) Expectations are low. Consensus revenue for Q2 is $234.95M. In Q1, revenue topped $300M. The increased traffic to their site should result in more sales.
4) Demographics to the site skews older, with more than half of visitors estimated to be older than 35. They generally have more buying power than younger tire kickers.
There are two main risks.
1) The visitors to vroom.com are not in-market shoppers. This is unlikely given the broader used car market is hot. Also, Carvana and Carmax both beat expectations on higher used car demand.
2) The website traffic is only a result of their increase advertising on TV. We know they increased TV advertising. But we don’t know how much and if their TV ad campaigns were efficient.
Bottom line: They should beat topline revenue estimates. Profit depends on how much their consumer acquisition costs increased.