VRM - Embedded Expectations Analysis - 2021 10 08
Vroom, Inc. (VRM:USA) currently trades at a premium relative to UAFRS-based (Uniform) assets, with a 1.5x Uniform P/B. At these levels, the market is pricing in expectations for profitability to remain muted, and management may have concerns about ASPs, gross profit per unit, and the expansion of recondition centers.Specifically, management may lack confidence in their ability to maintain average selling prices (ASPs), onsite vehicle units, and gross profit per unit growth. In addition, they may be overstating the potential of hybrid network integration and their efforts to begin proprietary lending services. Moreover, they may lack confidence in their ability to continue investing in their end-to-end Vroom platform and sustain location growth. Finally, management may lack confidence in their ability to leverage the speed, scale, and quality of their existing third-party partnerships.
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
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- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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