ACV Auctions Inc., a fast-growing digital wholesaling firm, expects to raise some $314 million in an initial public offering, set for March 24.
The IPO would give it a market value of $3.1 billion, according to a release.
Documents filed with the Securities and Exchange Commission show the company is offering 16,550,000 shares of Class A common stock. It plans to list its shares on the Nasdaq Stock Market under the "ACVA" ticker symbol. In the filing, ACV estimates the IPO price will be between $18 and $20 per share.
The company has been growing fast while reporting losses, the SEC filing shows.
In 2015, the online auction platform sold about 1,000 units. Last year, it sold more than 391,000 units. Even before the coronavirus pandemic caused a mass shift to digital operations in the automotive world, the Buffalo, N.Y.-based company was growing quickly: It sold 241,000 units in 2019, up from 90,000 the year before.
The company's revenue nearly doubled last year to $208.4 million. At the same time, it reported a net loss of $41 million in 2020, against a loss of $77.2 million the year before. ACV said it has incurred a net loss in every year since its inception.
Like others, the company sees the U.S. used-vehicle market as massive and wide open for business. It estimates some 22 million used vehicles are sold through the wholesale channel on an annual basis, generating about $230 billion in sales. Based on its average fee per unit of $494 last year, ACV said it sees a total addressable market opportunity of $10.7 billion for its core, auction marketplace offering.
"We believe that our digital marketplace addresses the limitations of traditional and hybrid auctions, and enables us to be successful in attracting dealers and commercial partners, including those who have historically not relied on auctions for inventory management," the company said in the filing.
ACV noted that the "highly fragmented" used-vehicle market includes more than 50,000 independent and franchise dealers, but the top 100 used-vehicle dealers comprise less than 10 percent of the market and the largest used-vehicle dealer -- which is not named in the filing but is ostensibly CarMax -- has just under a 2 percent share of the market.
The company said it is actively looking to expand and is initially focused on moving into Canada, potentially in 2022 or earlier. It cautioned, however, that no assurances are made for the timing of any expansion.
ACV launched six years ago with a single desk. It now has more than 1,600 employees and is in 125 market "territories" in the U.S., according to the release.
ACV has emphasized as much transparency on the vehicles at its auctions as possible and has launched innovative products, such as an undercarriage imaging scan, to give remote buyers confidence in buying used vehicles online.