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Why TrueCar's Stock Gained Over 11% Today

By John Rosevear – Updated May 6, 2020 at 7:43PM

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TrueCar puts most of the car-buying experience online -- and that seems attractive right now.

What happened

Shares of online car-shopping service TrueCar (TRUE -1.79%) closed higher on Wednesday as investors continued to show interest in companies that are well-positioned to help facilitate socially distant transactions. 

TrueCar's shares ended the day at $3.00, up about 11.9% from Tuesday's closing price.

So what

Like many stocks, TrueCar's shares were battered in the March sell-off as much of the U.S. economy shut down. But while they have yet to fully recover, they've shown signs of life in recent days as investors search for companies positioned to profit if the economy reopens -- but consumers choose to stay home.

TRUE Chart

TRUE data by YCharts. Chart shows the change in TrueCar's share price from January 1 through the market's close on May 6, 2020. 

TrueCar might be that kind of company. Its online platform is designed to streamline the process of shopping for and purchasing a new vehicle. Users can research different models, choose the vehicle and options they want, and are then matched with a dealer who has the vehicle in stock -- at a guaranteed no-haggle price. For consumers, the service is free: TrueCar gets paid by the dealers, typically a few hundred dollars per sale.

As the U.S. economy reopens, while many are still concerned about the COVID-19 virus, tools like TrueCar's that can simplify "touchless' commerce stand to do well. That's probably why TrueCar's stock was up today.

A row of cars at an auto dealership.

Image source: Getty Images.

Now what

How did TrueCar do in the first quarter? How has it been doing since quarter-end? I expect we'll get answers to those questions, and many more, when TrueCar reports its first-quarter earnings after the market closes on Thursday. 

 

John Rosevear has no position in any of the stocks mentioned. The Motley Fool recommends TrueCar. The Motley Fool has a disclosure policy.

Stocks Mentioned

TrueCar Stock Quote
TrueCar
TRUE
$2.75 (-1.79%) $0.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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