TrueCar Shares Plunge on Missed Earnings Call

Aaron Cole
by Aaron Cole

TrueCar CEO Scott Painter said his company will miss expected earnings for the second quarter, and said the company needed a “wake-up” in his call, Automotive News is reporting.

The news sent shares of TrueCar plummeting more than 35 percent. TrueCar closed Friday down 3.81 down to $6.87 per share.

Painter said a lack of marketing was to blame for the company’s struggles in the second quarter, not the recent highly publicized split with AutoNation.

Painter said the revised earnings would lower their overall revenue for the year around $20 million to $30 million this year.

In addition to fewer consumers buying fewer cars through TrueCar, the company said spending on its mobile platform and weak marketing. True car said it lost $15 million in the second quarter of this year.

Join the conversation
24 of 52 comments
  • Madroc Madroc on Jul 26, 2015

    TrueCar's problem is the challenge of monetizing information. Once upon a time it was really useful and even included information that wasn't widely available, like factory-to-dealer incentives, but they did't have a good way to charge for the service. That went away when the profit model depended on selling leads to dealers, and their "invoice" numbers started including add-ons like advertising fees. The upshot is that the TrueCar pricing model is probably better for dealers than the alternative because it's based on actual sales data so they can tell people they are getting a "good deal" even when they are paying $500 above invoice. I for one don't care how much other people paid, if your best number isn't at or below (real) invoice I'm going to email it to every dealer within 50 miles and invite them to beat it. No "negotiating" necessary. TrueCar offered a lot of consumers an interim position that was better for the dealers.

    • See 4 previous
    • Stuki Stuki on Jul 26, 2015

      @stuki hreardon, It would look like math/logic. And properly conceived, deductive, economics. As opposed to the woefully imperfect empiricism that's peddled under that banner these days. Not particularly applicable to car buying, either way. "Better" information does apply, though. There are degrees of imperfect, after all. Pretending a customer is just as well off/got just as good a deal by paying $2000 more, simply because the rug was pulled over his eyes, at best straddles the fine line between ignorant and plain dishonest.

  • Hreardon Hreardon on Jul 26, 2015

    The issue here is that TrueCar has convinced itself (and investors) that the aggregate market wants a flat price, no-negotiating model for new car sales. In reality, there is a *segment* of the market that desires this model, but time and again consumer actions prove that on the whole, they're not interested in this model when there are a few dollars to be saved. I've said it before and I'll say it again: if you don't want to haggle, just pay the price on the window stick under the "MSRP" header and be done with it. My issue with the dealership model is their lock-step control over state legislators to prevent direct sales and other competition. Even then, were direct sales made legal, I don't think we'd see mass consumer adoption of that model, either. I'm continually amazed that consumers think nothing of paying MSRP for jewelry, furniture, clothing - all with markups ranging from several hundred to close to 1,000%.

    • See 13 previous
    • Frantz Frantz on Jul 26, 2015

      @el scotto You do realize that the invoice cost of a vehicle changes thoughout the year with the same options right? This year on SuperDuty trucks it was around $900 difference from an early production to late production. Folks like you get okay deals, but most of the time you either pay more than you think, or you've spent so much time dotting all your i's and crossing your t's that you have to make less than minimum wage for the efforts to have been worth while, and you're still not happy. I get where you are coming from and am not seeking sympathy myself, but unless you worked in the industry to actually know the smoke an mirrors of different states and different dealerships it's hard/impossible to really navigate. Someone who just builds a good relationship with their dealer will be happy with the deals and have a far better experience, and have someone to go to bat for them if someone comes up.

  • Jimal Jimal on Jul 26, 2015

    Lack of marketing? If I see another ad with that hipster guy with the beard and the glasses talking about how he's "really into this car, but how do I know I'm getting a good deal", I'm gonna hurl. TrueCar's problem is not lack of marketing.

  • Jim brewer Jim brewer on Jul 26, 2015

    Not just car dealer model that has anticompetitive aspects. Just one of the most visible. Our whole economy is turning that way. Antitrust law is a dead letter in this country. Consequently, us air and American airlines are allowed to merge and airfares to mid size cities dramatically rises. The pols figured they would give their friends a hall pass and nobody would notice the extra $100 bucks. Repeat that in two dozen industries and you have a real problem.

    • Stuki Stuki on Jul 26, 2015

      It's not "allowing" that is causing this country to go down in flames. It's banning. As in banning all and anyone from jumping in and competing with the two mentioned airlines: No questions asked; no insurance blah, blah; no gate restrictions etc., etc. Just let it rip, and overcharging becomes pretty much impossible. All the industries where the government is involved in any way, shape or form, are the ones where costs are spiraling out of control. Which is pretty obvious, since when dimbulb-in-chief and his starry eyed and stupid acolytes decide it sounds good to have a "public-private dialog or partnership", he/they inevitably invite executives at currently dominant companies in the industry he/they are about to dialog with. And, being dim and all, are equally surprised every time, that said execs may in fact recommend things that are good for executives of currently dominant companies in their industry. It's simply a croc all the way. Just get the restrictions surrounding anything whatsoever, including most, or perhaps even all, of IP, out of the way, and things will just sort themselves out, one way or the other.