Online used car marketplace CarGurus skyrockets in stock market debut – Mashable

Used auto marketplace site CarGurus came from under the radar to bring home a big payday for investors in its initial public offering on Thursday.

The Boston-based startup’s stock soared as high as 80 percent from an already higher-than-expected base price of $16 before dipping later in the day. By market close, its market cap had reached $3.7 billion.

The company’s slump-busting success amid a string of disappointing tech IPOs came as a left-field surprise to many in the tech media. While the site’s grown to be the leading marketplace of its kind in the country, its lack of venture capital backing (CarGurus hasn’t raised funding in a decade) and its geographic distance from Silicon Valley and New York may have kept its profile low.

The company’s value derives from software that locates optimal deals with algorithms and collects vast amounts of data to inform purchase decisions. Unlike some of its competitors, it doesn’t charge a pre-transaction fee. Rather, it makes money from selling premium subscriptions to access extra selling tools and secure more prominent listings.

Since its founding a little over a decade ago, the company has thrived as dealers have migrated more of their business online. It became cash flow-positive early on, and thus avoided the attached strings that come with tech investor money. 

According to financial filings, the company turned a profit of $6.5 million last year after losing around $1.6 million the prior year.

While it competes with traditional dealerships as well as sites like AutoTrader and, CarGurus CEO Langley Steinert told Bloomberg that the space remains fairly fragmented.

The company is hoping to parlay the success into a bigger international expansion and, possibly, acquisitions of smaller rivals. 6d37 87e2%2fthumb%2f00001

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