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Why Shares of TrueCar Jumped 18% on Friday Morning

By John Rosevear – Nov 4, 2016 at 11:58AM

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A better-than-expected third-quarter earnings report suggested TrueCar is back on track after a tough stretch.

What happened

Shares of online car-buying service TrueCar (TRUE) surged on Friday morning. As of 11:45 a.m. EDT, TrueCar's stock was trading up over 18% from Thursday's close.

So what

TrueCar reported its third-quarter earnings after the market closed on Thursday, and investors liked what they saw. The company's adjusted loss of $0.01 per share was well ahead of the average $0.06-per-share loss expected by Wall Street analysts. 

Image source: TrueCar.

Looking a little deeper, there were several signs that CEO Chip Perry, who joined the company after a management upheaval late last year, has TrueCar's business headed in a good direction.

  • Revenue grew 4% to $75.1 million, a record.
  • TrueCar users bought 220,633 vehicles via the service in the third quarter, up 6.1%.
  • TrueCar now has 10,759 new-car "franchise dealer" partners, up 24%.
  • Acquisition cost per sale was an average $180 in the quarter, down 8% from a year ago.
  • There were 7.6 million average monthly unique visitors to TrueCar's site, up 15% from a year ago. 
  • Adjusted EBITDA rose to $5.8 million, more than double its year-ago result, with a 7.7% margin.

Now what

TrueCar guided to a strong finish to 2016. It expects fourth-quarter revenue, vehicles bought via the service, and adjusted EBITA all to come in well ahead of year-ago results.

John Rosevear has no position in any stocks mentioned. The Motley Fool recommends TrueCar. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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