Cazoo’s shares have crashed to less than half of their initial price just five months after the company became publicly owned.
The online car retailer floated on the New York Stock Exchange on August 27 last year via a special-purpose acquisition company, with a launch price of $10 a share (circa £7.40), which valued the company at $7bn (circa £5.2bn).
However, they’re now trading at less than half that – just $4.15 each (£3.06) – pulling the valuation down to $3.12bn (£2.3bn).
It’s left shareholders in the Daily Mail’s owner, among others, licking their financial wounds.
The Daily Mail & General Trust (DGMT) media conglomerate, which owned 21 per cent of Cazoo’s stock, was taken off the stock market this month by chairman and controlling shareholder Lord Rothermere via a deal that was partly paid for with Cazoo shares following its listing.
The Sunday Times said today the headline value of the DGMT takeover was £2.75bn when originally suggested in 2021 and £980m of that would have come from the shares.
But now, thanks to the share price collapse, that means the value received by DGMT shareholders from the takeover via the Cazoo component has plummeted by £565m, dropping to £415.7m, said the Sunday Times.
Lord Rothermere previously said the DGMT’s investment of £117m looked set to be worth eight times that when the company listed, adding that if the company could join the NYSE successfully, the money could help fund the takeover.
The Sunday Times told today how the initial valuation had been greeted with disbelief by traditional car dealers in the UK. Many of them said they’d been valued at a fraction of Cazoo’s price despite selling far more cars.
Cazoo founder Alex Chesterman is understood to regard the share slump as being related to technology stocks as opposed to something specific to the retailer.