Hi,
We are going to talk about the car, you will understand that. More specifically, we are going to venture into the American market for used vehicles, a market that should be presented beforehand.
We sell clothes, books and everything on the Internet, so why not cars? This is the idea that proves the dynamism of the digitization of the used car market in the United States.
In 2019, 42 million used vehicles were sold.
If 50% of sales are from individuals to individuals, we note a fragmentation of the professional market, since the 100 largest used vehicle resale companies represent ... 6% of the market share!
It is a market to be consolidated.
The interesting point is that in> 90% of cases, the Internet plays a role in the customer's information journey (advantages / disadvantages of vehicles, forums, arguments), this market is not yet penetrated by digital in terms of concerns sales (1% of sales are made by pros on the internet).
Buying a car is a difficult, uncertain and time consuming process.
Buy a car in 1 hour, rest assured to test it, to have delivered it to the garden. Great, isn't it? This is Carlotz's job.
What service does Carlotz offer?
-For sellers, Carlotz simplifies the traditional supply circuit by offering the seller access to the customer via the Carlotz platform.
**12 million vehicles per year go through wholesalers / auctions
**
Passing through Carlotz, the vehicle has fewer intermediaries. The seller can therefore obtain an additional minimum of $ 500-1000, compared to the “classic” vehicle sales channel.
All benefit. The seller has more money and Carlotz has an efficient supply chain.
Carlotz aims to move from a regional to national scope. Concretely, it wants to mesh the US territory.
For that :
Objective> 10 new hubs per year
Target 1,600 vehicles sold per year by new hub, 2,600 / year by 2025.
On the commercial level, Carlotz has certain advantages: the customer acquisition cost is reasonable compared to that of the main competitor ($ 315 against $ 1,176 for Carvana), there is also a good contribution to the margin per unit sold.
Technically, this reflects Carlotz's low variable costs.
Carlotz's gross margin is good. Carvana supplants her, you have to look at the risks linked to the inventory, where Carvana largely supplants Carlotz. In question, it does not take as many risks on the inventory (minimum and rapid inventory turnover).
Carlotz is targeting average annual revenue growth of 143% through 2023.
An exceptional growth, which would make Carlotz a company with a turnover of 1.54 billion dollars in 2023, against 113 million in 2020.
We are targeting 80,000 sales in 2023 (compared to 6,200 in 2000)
Carlotz is full of assets that could lend credibility to this ambitious direction.
First, Carlotz's growth is already well underway:
-> Growth in the number of visitors to the site (45k August vs 230k in February)
-> Appearance for the 3rd time in the Inc 5000, ranking of the fastest growing companies (rank 962, 435th in 2019).
In addition, the company has excellent cash flow to finance its future growth. Its marketing will be able to absorb part of ... $ 318 million in cash (to be compared with its capitalization of less than $ 900 million).
The cost of acquiring customers has a margin.
Why Carlotz and not a competitor? Growth prospects, of course.
Put in parallel with capitalization, and good cash flow, Carlotz has a profile that is all the more attractive as it is inexpensive (<$ 900M).
143% average annual growth over 3 years.
How does Carlotz currently stack up against his predictions? (Q4 2020 - investor presentation)
• 1750 - 1800 vehicles sold (1814 final)
• 31-32M revenue (37M final)
We are on a solid basis of guidance, even going so far as to outperform it.
On March 23, an analyst (Barrington Research) initiated the stock's hedging, outperforming to $ 22.
We are currently costing less than 3x cash flow and less than 1x 2022 sales / 0.6x 2023 sales.
## ### We are in the investor stake: Buy a project, grow, and wait.
In the short term, the stock is attracted by its historic lows
Article in English inspired by the work of Théo Fontrier.