Can TrueCar Keep Rolling After Last Week's 37% Pop?

By Rick

Source: TrueCar.

TrueCarwas one of last week's biggest winners, soaring 37% after posting record financial results. The provider of new customer leads for the automotive industry is still one of this year's biggest losers. The stock has may have more than doubled since bottoming out three months ago, but it has still shed 63% of its value.

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Thursday's strong report was a fresh change of pace for investors from its previous quarterly outing. The stock shed more than a third of its value after posting weak results for the second quarter in August, hosing down its guidance along the way. It was a report so bad that its CEO announced that he would be leaving the company once a suitable replacement was found.

The outlook at the time still suggested modest growth, but investors had been bidding up this early stage growth stock, pricing it at richer multiples.

Several metrics clocked in at record levels for TrueCar in last week's report.

  • Revenue at $72.4 million was 28% ahead of where it was a year earlier. This is the third quarter in a row that TrueCar's top line has clocked in at a new high.
  • The 208,034 vehicles that folks bought from TrueCar Certified Dealers -- up 21% since a year earlier -- is also the most in company history.
  • Traffic and prospects also hit new records. Unique website visitors soared 43% since the prior year to 6.6 million, and prospects topped a million for the first time. Cost per sale also landed near an all-time low.

Things aren't perfect. Shares declined for seven consecutive months before moving higher last month. Even after more than doubling since its summer sell-off, the stock is still trading below last year's IPO price of $9.

TrueCar also experienced a sequential dip in the number of participating dealers, but that was expected after losing AutoNation in July. AutoNation isn't the only one car dealer network that has had its doubts about the model. TrueCar may give interested car buyers the information on recent sales data to give them the best deals from participating showroom partners, but some showrooms prefer to seal the deal the old-fashioned way. Some car dealers have also voiced their displeasure on TrueCar's marketing practices.

These concerns didn't seem like such a big deal when TrueCar was rolling, but then came the summer's rude awakening. When TrueCar lowered its revenue guidance for all of 2015 -- from as much as $290 million to a range between $252 million to $258 million -- there seemed to be more concerns than just AutoNation's departure. TrueCar bumped its outlook for the year to between $260.2 million and $261.7 million last week. That's a far cry from where it was six months ago, but at least it's a step up from where it was three months earlier.

TrueCar is driving in the right direction again, even if it still has a long way to go before getting back to where it was and where it needs to be.

The article Can TrueCar Keep Rolling After Last Week's 37% Pop? originally appeared on

Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends TrueCar. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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