Earlier this week it was reported that TrueCar, the online car middle man, was expecting to raise $125 million in its IPO to be released in the near future. It is now evident that that number was highly overvalued, as the company was only able to add $70 million to deal with its growing capital expenditures.
The company sold all of its available shares, about 7.8 million, but at a price much lower than expected, about $9 as opposed to $12-$14.
Newly appointed President of TrueCar, John Krafcik, said the fall in valuation was mostly due to “general nervousness among equity traders” about the company’s future in the current market. Krafcik cites a shaky market as one of the primary causes of the disappointing IPO launch.
By the closing bell Friday, TrueCar’s share price had risen to $10.06 on the NYSE and $10.75 on the NasDaq, still much below the company’s target, although this bump in price did not help the company in its goal to reach $125 million.
The company will most likely not try to release more shares of the company in the near future, and most likely work with the $70 million. This certainly seems like enough money for a company that just lists dealer-available cars on its website to connect with consumers. Overall, there was a sense of achievement and jubilation among TrueCar executives after the IPO was final.
One thing is certain, TrueCar certainly has a solid financial future ahead of it. According to a recent survey, 90% of consumers do some or all of their car shopping online.
– Zac Durkin