Cazoo chief executive Alex Chesterman OBE will ring the opening bell at the New York Stock Exchange this afternoon as the used car e-commerce firm is publicly listed.
At 2.30pm UK time (9.30am in New York) Cazoo begins its listing, with a valuation of up to $8 billion (£5.8bn), barely three years since serial tech entrepreneur Chesterman founded the business.
If the valuation is achieved, Cazoo (NYSE:CZOO) will instantly become the highest valued UK company trading in the USA.
The scale of its valuation has been a source of discussion for the UK’s motor trade.
Hargreaves Lansdown analyst Nicholas Hyett told City AM that people are divided as to how to define what kind of firm Cazoo is – to some it is an online platform business capitalising on interest in tech stocks; to others it’s an over-valued online retailer, having to invest heavily in stock to sell at relatively skinny margins.
Chesterman’s track record, in building and selling LoveFilm and Zoopla, also appeals to tech investors.
Hyett told City AM: “Online platform businesses are very valuable. Once one achieves scale, as Cazoo is rapidly doing, everything is effectively profit”, Hyett explains.
“The problem in applying that logic to Cazoo is that it is not just a platform business, it is also a used car business and that is a very capital intensive type of business. Even if they are very efficient at what they do, they still have to buy used cars at some point.”
In Q2 2021 Cazoo sold 10,692 vehicles, generating revenues of £141 million and £460 retail gross profit per unit, 5% gross margin.
“We now have over 2,250 customer-obsessed staff, fully focused on delivering the best and most comprehensive car buying experience to consumers across the UK and Europe.
“Our strong performance is a result of the hard work and dedication of everyone at Cazoo, and I would like to thank the entire team for this superb performance despite the COVID restrictions experienced during this period,” said Chesterman at the time of the Q2 results announcement.
Cazoo, which took stock preparation in house after initially outsourcing to BCA, is preparing to launch used car e-commerce in Germany and France before the end of 2021.