Cars.com Stock In Focus After $25M Acquisition Of DealerClub: Retail’s Upbeat
DealerClub is an emerging, dealer-to-dealer, digital wholesale auction platform.
FollowShares of Cars.com Inc ($CARS) were down 0.85% on Friday after the company announced the acquisition of DealerClub, an automotive digital wholesale auction, but retail sentiment seemed optimistic.
Cars.com, which doe business as Cars Commerce, paid about $25 million in cash at closing of the deal, the company said, adding there was ‘potential for an additional performance-based consideration of up to $88 million based on achievement of certain financial thresholds.
DealerClub is an emerging, dealer-to-dealer, digital wholesale auction platform. The deal adds an additional revenue stream to Cars.com’s subscription business, the com[any said.
According to the company statement, the acquisition is expected to create long-term cross-selling opportunities and acceleration of AccuTrade adoption for Cars.com.
"The acquisition of DealerClub is a critical step for Cars Commerce's strategic vision to expand into the wholesale market by catering to the large dealer segment looking to gain operating and financial efficiencies by leveraging technology to trade used vehicles within a trusted network," Alex Vetter, CEO of Cars Commerce, said. "By integrating DealerClub's technology onto the Cars Commerce, we add transactional dealer-to-dealer wholesale capabilities focused on transparency and digital efficiency, and significantly extend our influence in the wholesale market by giving power and profits back to the retail community."
Sentiment on Stocktwits seemed upbeat after the transaction, with at least one commenter optimistic about the company’s prospects.
Cars.com is expected to report fourth-quarter earnings next month, with Wall Street analysts expecting earnings per share of $0.56 on estimated revenue of $183.9 million ,according to Stocktwits data.
The Cars Commerce platform includes the flagship automotive marketplace and dealer reputation site Cars.com, digital marketing technology and services from Dealer Inspire, and appraisal technology from AccuTrade.
Cars Commerce stock is up 1.5% year-to-date.
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