CarGurus Shares Erupt in IPO

October 12, 2017 by 247chrislange

Source: Thinkstock
CarGurus Inc. (NASDAQ: CARG) entered the market with a bang on Thursday. In just its opening day, this is easily one of the most explosive initial public offerings (IPOs) we have seen this year. The price for its 9.4 million shares was set at $16 apiece, with an overallotment option for an additional 1.41 million shares. Although shares priced above the expected price range of $13 to $15, the stock actually entered the market at $29, a more than 80% premium to the original pricing.

The underwriters for the offering are Goldman Sachs, Allen, RBC Capital Markets, JMP Securities, Raymond James and William Blair.

This global, online automotive marketplace connects buyers and sellers of new and used cars. Using proprietary technology, search algorithms and innovative data analytics, management believes it is building the world’s most trusted and transparent automotive marketplace and creating a differentiated automotive search experience for consumers.

The company described its finances as follows:

In 2016, we generated revenue of $198.1 million, a 101% increase from $98.6 million of revenue in 2015. Our revenue for the six months ended June 30, 2017 was $143.3 million, a 70% increase from $84.2 million of revenue in the six months ended June 30, 2016. In 2016, we generated net income of $6.5 million and our Adjusted EBITDA was $11.0 million, compared to a net loss of $1.6 million and Adjusted EBITDA of $(0.4) million in 2015. For the six months ended June 30, 2017, we generated net income of $8.6 million and Adjusted EBITDA of $14.1 million, compared to net income of $0.5 million and Adjusted EBITDA of $1.7 million for the six months ended June 30, 2016.

CarGurus intends to use the net proceeds from the offering for general corporate purposes, including working capital, operating expenses and capital expenditures.

Shares of CarGurus were last seen up about 80% at $28.78, with a range of $27.50 to $30.19 on the day so far. As of noon Eastern, just over 7 million shares have moved on the day.