Asset Manager Investing in Global Technology Sector

We're an asset management firm allocating our capital into asset classes benefiting from technological innovation and applications globally. We serve as a family office of a tech professional who has spent over a decade as an entrepreneur, operator, and venture investor across Asia and the US.

Our small team is made up of diverse investment professionals who research, identify, and execute relevant opportunities. We occasionally share some of our investment memos, insights, and analysis here.

Friday, June 26, 2020

Q2.2020 - Vroom: Disruptive Model With Proven Profitability Potential

  • Vroom planned to get listed at ~$22 IPO price target. Upon the opening, the stock soared to ~$+47, which at ~4.2x P/S looks a bit overvalued to Carvana's ~1.4x.
  • It is still well-positioned to disrupt the ~$840 billion used car market with its eCommerce business model, whose revenue grew by ~5x in the last four years.
  • Demand has been strong, while variable vehicle expenses have also been in downward trends in recent times, further proving its profitability potential.

We believe that Vroom (NASDAQ:VRM) should be an interesting technology IPO opportunity this year. The company provides an end-to-end eCommerce platform for buying and selling vehicles, which was a +$800 billion market last year alone. In our view, the frictionless transaction, data-driven, and asset-light model are highly disruptive and more profitable at the same time. The company already filed for IPO earlier this June, and we had initially expected to assign an overweight rating on the stock upon its listing. As the shares price exceeded the expectation and soared to ~$47 on the first trading day, we will switch to neutral, for now, leaning towards overweight once we found a more attractive entry point.

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