CarLotz, Inc.: Initiation of Research Coverage

Tuesday, February 16, 2021

William Blair & Company initiated research coverage of CarLotz, Inc. (LOTZ $9.10). CarLotz is the used car industry’s only consignment-to-retail marketplace, designed to deliver the best deals to both sellers and buyers via its customer-friendly, low-friction platform.

Analyst Sharon Zackfia estimates the company can generate revenue of $113.6 million in 2020, $337.4 million in 2021, and $883.9 million in 2022. By 2023, she projects CarLotz will grow annual vehicles sold to 76,000 (from 6,200 in 2020), translating to revenue of about $1.5 billion and a 136% revenue CAGR, and believes CarLotz will inflect into modestly positive EBITDA in 2023.

Zackfia said, “CarLotz’s rapidly growing, asset-light consignment-to-retail model delivers favorable economics to both used car buyers and sellers. With a differentiated sourcing model—including roughly 60% of inventory consigned from corporations—CarLotz provides commercial sellers direct access to retail customers at a favorable profit profile relative to wholesale auctions. CarLotz’s unique ‘retail remarketing’ model, combined with its customer-friendly buying experience, results in the best deals for both sellers and buyers, yielding an average $1,000 in savings to customers alongside about $1,000 in better profit per car for sellers versus wholesale auctions. As we have seen, companies that successfully execute transparent, customer-friendly brands against the fragmented used-car marketplace backdrop can drive strong share gains. Moreover, CarLotz has plenty of opportunity to gain remarketing volume to support its inventory needs. CarLotz also has room to expand from just 10 hubs across six states, and with the proceeds of its going-public transaction, CarLotz is poised to rapidly ramp up sales with geographic expansion across the United States to potentially over 40 hubs by the end of 2023.”

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William Blair or an affiliate received compensation for investment banking services or non-investment-banking services from CarLotz, Inc. within the last 12 months. CarLotz, Inc. is or was, within the last 12 months, an investment banking client of William Blair and/or one or more of its affiliates.

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