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Amazon Launched Vehicle And TrueCar (TRUE) Slumped
Sribatsa Das, MBA
Co-Creator – Altman Z-Score+ Corporate Credit Risk App &
Founder of Business Compass LLC
TrueCar’s platform enables users to obtain market-based pricing data on new and used cars, and to connect with its network of TrueCar certified dealers. Amazon has been aggressively entering into new categories. Earlier this year, it entered into home repair and improvement services. Last week, Amazon announced Vehicle. This service is aimed at providing competing services to TrueCar and Edmonds. Due to the economy of scale and scope of Amazon, TrueCar slumped. Is the competitive threat the real reason for the slump or, does TrueCar faces fundamental problem? This article analyzes TrueCar from Altman Z-Score perspective.
Z”-Score trend for TrueCar over time indicate that from a corporate risk point of view, the company is falling into the “Distress Zone”.
TrueCar’s interest coverage ratio has deteriorated over time that indicates the inability to service debt.
In conclusion, bankruptcy risk of TrueCar is in the “distress zone” and interest coverage ratio indicates inability to service debt. Financial distress is further accentuated by downward revenue pressure due to the arrival of strong a competitor caused the stock to slump.
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Disclaimer:
The author holds TrueCar securities.
This article is not a recommendation on the company security.
