What: Shares of online car-buying service TrueCar (NASDAQ:TRUE) jumped more than 14% on Tuesday, Nov. 24, one day after the company announced that industry veteran Chip Perry had been named as its new CEO.
So what: Perry was the first employee of AutoTrader, a pioneering online car-classifieds site. Perry joined the company in 1997 and served as its CEO until 2013. Over that time, AutoTrader grew from a tiny start-up to a company with 3,500 employees and $1.5 billion in annual revenue.
He's a respected veteran who is expected to bring some order to TrueCar, which has appeared to be in disarray for several months now. The company is dependent on new-car dealers, but has long had difficult relationships with many key dealer groups. The difficulties became public when AutoNation (NYSE:AN) announced earlier this year that it would pull its 279 stores out of TrueCar's network, after a dispute over data-sharing.
That news was followed on July 24 by TrueCar's announcement that it would miss its second-quarter earnings targets by wide margins.
The hint was that the miss was attributable to poor execution by the senior management team. The company's share price was clobbered, and TrueCar's board of directors did not hesitate: The company announced on Aug. 6 that founder and CEO Scott Painter would step aside. Not long after, president John Krafcik and vice president Larry Dominique, both well-regarded auto-industry figures, announced plans to depart the company.
The company's third-quarter earnings showed some improvement, but Perry will still have much to do to right TrueCar's ship.
Now what: In an interview with Automotive News on Monday, Perry extended a big olive branch to dealers -- a smart move that appears to have pleased investors. He emphasized that his job will be to win back their trust. "I believe there are many ways in which TrueCar can better serve car dealers and my goal will be to earn their trust back and to listen to them," he told Automotive News. "There is tremendous room for improvement in how [the balance between consumers' needs and dealers' needs] is struck at TrueCar."