Online used car disruptor Cazoo faces another rocky week this week, with its market worth set to take another hit if ex-Daily Mail & General Trust shareholders offload their incoming investment.
Former DMGT investors will at last receive their stake in Cazoo on Thursday – part of the deal that was struck to take the publisher of the Daily Mail off the stock market.
DMGT had been an early investor in Cazoo, whose $8bn valuation in 2021 when it was floated on the New York Stock Exchange drove a takeover of DMGT by chairman and controlling shareholder Lord Rothermere.
Cazoo shares were brought into play to sweeten his offer for the company but they’ve plunged by 90 per cent since then.
Roughly a third of the £12.63-per-share offer for DMGT came from the value of Cazoo shares in cash dividends and cash.
However, although the cash element has been handed over, transferring the shares has been repeatedly delayed beyond the February 27 due date.
Cazoo shares were worth $4.24 (£3.48) then but they’ve plummeted in recent months, with its stock now selling for just 99 cents (81p).
Founder and CEO Alex Chesterman blamed the slump on ‘irrational fear’.
In April, Cazoo posted a loss of £180m for 2021, despite record-breaking revenue.
Earlier this month, Cazoo said it would be slashing 750 jobs, ending its subscription service and rationalising assets to try to save £200m over the next 18 months.
As a result, according to the Daily Telegraph speculation is increasing that DMGT shareholders will sell their Cazoo holdings once the stock finally arrives.
That in turn will have a knock-on effect on Cazoo’s market value, sending it even lower. It’s currently worth $722m (circa £589.4m).
Had they received the Cazoo shares along with the cash element, they’d have been worth $6.09 each.