Online used-vehicle retailers such as Carvana Co. and Vroom Inc., after riding high on consumer and investor interest during the COVID-19 pandemic, are facing a reckoning.
Carvana slashed 2,500 jobs and suspended executive pay after losing $506 million in the first quarter. Vroom tapped a new CEO and said it would consider cutting jobs after reporting a big loss. Shift Technologies Inc. cut its corporate staff by 10 percent last month.
The now-humbled disrupters, which just last year were tormenting franchised dealers with aggressive Super Bowl ads, are seeing their stock prices fall as their losses grow. Rising interest rates and high prices generally — especially for gasoline — are undermining retail demand, while wholesale prices remain high. For companies pushing to grow in a hot market, the first quarter brought a rude awakening.