By on May 6, 2014

2013 TrueCar IndyCar

Automotive pricing site TrueCar has revealed its IPO price will be set between $12 and $14, bringing the company a valuation of around $1 billion should the price-per-share lean closer toward the top end.

The Wall Street Journal reports the IPO’s 7.78 million available shares — to be listed on NASDAQ as “TRUE” – could raise as much as $108.9 million once shares are made available.

Beyond the IPO, TrueCar will have 71 million shares outstanding; if priced at $14/share, the company’s market valuation will be $994 million.

Lead underwriters of the IPO are Goldman Sachs, J.P. Morgan and RBC Capital Markets.

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12 Comments on “TrueCar IPO Pricing, Valuation Revealed...”

  • avatar

    So how many TTAC readers wanna buy in?

    I think I could stomach 500 shares.

    • 0 avatar

      This might be a wait-and-see… revenues were pretty decent (130 million) last year but they had a net loss of 25 million, down from a loss of 75 million the year before.

      It’s unclear from what I’m reading what their path to profitability is…

  • avatar

    I’m very interested in watching how this all plays out. The dealership networks are starting to push back hard on the third party/referral sites and a number of the larger chains have have already dropped them entirely in lieu of managing their own online presence.

    I can completely understand why they’re going this route, I’m just interested to see how it plays out. Scuttlebutt is that what TrueCar is looking to do is build a brand and start moving into financing, leasing, warranty coverage, etc. That’s the real profit center of the new car business and it’s got the dealerships understandably nervous.

    What the dealership chains are looking to avoid more than anything is momentum building to tear down their legal protections. With public support seemingly behind Tesla and rumors that TrueCar is even looking to move into the retail space on top of the finance space, this could be the beginning of the end for those nice barriers the dealerships have put up to protect themselves.

    Then again, we’ve seen this play out over the years with other new entrants, only to fizzle out, so….

    • 0 avatar

      “…managing their own online presence.”

      Problem is, many dealerships are not competent in this regard. I have a hunch it’s because anyone with basic entry-level IT skills likely has better opportunities available than to work for a car dealer.

      • 0 avatar

        There’s no shortage of IT talent around. Someone in senior management just has to make the decision to do something, and then allow adequate time for their staff to pull it off.

        • 0 avatar

          You probably have little experience working with/in “IT.”

          There are plenty of people out there who can turn on computers and semi reliably hit keyboard keys. But as Paul Graham has noted, the difference in value add between an average programmer and a top programmer is at least hundredfold. And since few if any bean counters outside finance is willing to scale compensation accordingly, top “IT” talent go work for startups, where equity based compensation (may) more accurately reflect their value. Card dealers simply don’t have a chance.

          Having consulted in both “sectors” for a long time, I can without any reservation state that there is a much, much greater shortage of “IT” talent, than of “Senior Management”/C level talent. It’s not even close. C-level consulting still pays better, though, since those guys have more money but less of a clue, hence are both can, and need to, pay for the latter.

      • 0 avatar

        In many parts of the country the standalone, family owned one or two dealership model is dying. Fast.

        These guys don’t have the capital to invest in facilities, training and equipment that are increasingly being mandated by the manufacturers. Additionally, in order to simply compete they’re going to need scale. Will lots of smaller shops survive? Of course they will, but the trend is not their friend. As more people turn to the internet to do their car shopping, either you have a good online presence or you get passed over by potential buyers. It’s really as simple as that.

        The bigger shops are investing big dollars into their online presence and increasingly working to control the leads and lead generation through their own devices, not third parties. It’s a significant risk for the lead generators like autotrader,, etc., hence why it’s smart for TrueCar to branch out into ancillary services like financing where the profit margins are likely much better.

        Case in point, we have two large Penske Audi dealerships within 20 minutes of each other in NE Ohio. Both building new showrooms, very flexible hours and excellent service departments. Their online presence is still amateurish, but their combined inventory is massive and they advertise as a combined entity. Most people overlook the three other smaller Audi dealers as a result. According to them, they get very few leads through the generation websites, most people just google “Audi dealer” and with their Google Adsense advertising, these two shops show up as #s 1 and 2. They have the cash to throw lots of dollars to keep their search rankings high. The smaller, family owned shops aren’t doing that.

    • 0 avatar

      Actually, it is the low overhead operations who maintain all sorts of advantages.

      How many of you want to invest in a company that demonizes dealers, but has built their revenue model on, well, dealers. Dealers are wising up. Some rather large dealer groups have figured out they can use the TrueCar site to validate their own prices WITHOUT paying the $300. fee to TC. It is amazing how many consumers don’t know that using TrueCar increases the dealer’s unit cost basis by $300. on a new vehicle. How does that work out in the long run? Current investors want to get rid of Scott Painter. He needs to cash out, buy a dealership, and try to learn how to run it before setting out to change an entire industry that is obviously not broken.

  • avatar

    What sort of earnings does TrueCar have to justify this lofty valuation? I can’t find anything on them.

  • avatar

    How are they different from CarsDirect, other than a prettier website?

    I used CarsDirect a couple times and it was great.

  • avatar

    With IPO’s, who knows.

    Disruptive businesses aren’t necessarily profitable. That is, it is possible to depress auto retail margins without being able to capture much or any of it.

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