CarGurus plans IPO – report
29 Mar 2017
No surprise here: CarGurus, the surprising Boston-based site that’s taken the traffic lead among U.S. auto advertising companies, is apparently planning an initial public offering.
The company, which we profiled in our Automotive Advertising Annual (see CIR 18.03, Feb. 16; download a free preview here), has reportedly hired Goldman Sachs and Allen & Co. as the lead bankers on the IPO. The company would be valued at more than $1 billion, Reuters reported.
Reuters said none of the companies could be reached for comment. We haven’t tried yet, but will try later today (and expect the same result). (If we get any comment, we’ll update this post.)
CarGurus is one of the few major classified advertising sites that has grown organically with very little external investment. It launched in 2006, now employs about 400 people, and told us it plans to launch in Germany very soon, and elsewhere in Europe later this year. (The German site is up but hasn’t formally launched yet.) The company launched in Canada in 2015 and the U.K. last year.
SimilarWeb rankings we quoted in our automotive annual showed CarGurus with 41 million visitors in December, compared with 21 million for Autotrader.com and 15 million for Cars.com. Of course, traffic isn’t the whole story — revenue, dealer engagement and user engagement count for more even than traffic — but it’s still created a compelling business on reported investment of just about $5.5 million U.S.. (Crunchbase, our usual resource for such things, doesn’t even show any investments in CarGurus.)
CarGurus has grown without significant advertising, which surprises industry observers. The company has about 20,000 dealers paying for its services in the U.S., at rates ranging from $500 per month to more than $100,000 per month.
— Brian Blum contributed to this report