TrueCar's Outlook Is Cloudy, Analyst Downgrades Stock Seeking More Visibility

JP Morgan analyst Rajat Gupta downgraded TrueCar, Inc. TRUE from Overweight to Neutral.

This week, the company reported fourth-quarter EPS loss of 7 cents per share, falling short of the analyst consensus estimate of loss of 6 cents and revenue of $46.21 million, missed the consensus estimate of $47.29 million.

The analyst cites the weakening tailwinds from inventory and limited visibility on a sustained turnaround in revenue and profits as reasons for the downgrade. 

The analyst writes that it was a disappointing quarter for the company with an uncertain path to recovery in growth and profitability, especially as the boost from rising new vehicle inventories begins to fade. 

While upcoming products like TCMS, OEM advertising, and data monetization, along with TC+ integration into DMS platforms, offer potential, TRUE must demonstrate clear results from its initiatives and investments in sales and marketing, adds the analyst.

The analyst says that the possibility of a merger or partnership with industry peers cannot be ruled out. 

Gupta revised the FY25 EBITDA estimate from the previous +$15 million to breakeven due to weaker dealer revenue. The analyst also lowered the FY26 estimate from +$35 million to +$25 million. 

Due to these significantly reduced projections, the analyst also withdrew his price forecast on the stock.

Price Action: TRUE shares are down 5.21% at $2.531 at the last check Friday.

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