Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

Used-car marketplace Vroom continued its march towards going public yesterday with the release of an updated IPO filing. The documents it filed provides pricing information for a somewhat odd public offering.

As a business, the heavily venture-backed Vroom is immature. It generates very little gross profit from its revenue (implying that it is unable to price its services attractively from a business perspective), and while it has managed consistent revenue growth, the company’s top-line gains (+39.3% in 2019) came at the price of rising unprofitability (+67.9% in 2019, on a net basis).

Even more, the firm’s numbers are deteriorating in Q2 due to COVID-19 and related disruptions. But, today’s public markets are prepared to move inversely to news, and Vroom, by going public as Q2 crawls in June, may manage to get its IPO done while stocks are back near record highs.

Let’s explore the company’s proposed $15 to $17 IPO price range and its implied valuation to see if we can parse what the company (and its investors) might be thinking.

Cheap, yet expensive

In its S-1/A filing, Vroom reports that it expects to price its IPO at between $15 and $17 per share, a range that may shift higher or lower depending on investor enthusiasm, or lack thereof. Vroom hopes to sell 18.75 million shares in its debut, generating gross proceeds of between $281.25 million and $318.75 million.

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