Have The Wheels Come Off?

The online car supermarket, Cazoo, has filed a notice of intention to appoint Administrators.

The company was valued at over $6.4bn after floating on the New York Stock Exchange in 2021, so this marks a dramatic fall from grace. Since then, their share price has dropped and the business has been forced into a number of restructurings and refinancings in order to attempt to survive. This included a $630m debt-for-equity swap in December 2023.

Cazoo admitted last week that they needed to raise further cash, but had received no offers of external capital, and was spending £30m every quarter.

 Founder Alex Chesterman became one of the richest people in Britain when the company floated, just three years after it was founded. The company’s name will no doubt be familiar to many of you after they have spent millions of pounds on sports sponsorship deals and advertising in order to boost their profile. This included sponsoring Aston Villa and Everton, as well as football clubs in Europe such as Valencia and Marseille, as well as other sporting events.

At one point, 5,000 people across Britain and Europe were employed by the company, but they have since cut thousands of jobs in their attempt to survive.

A fall in the value of used cars and fears of a drop in demand for electric cars are also being blamed for the potential Administration.

Cazoo’s original business model involved owning all of its used car stock, which it offered to deliver to customers’ homes from a network of UK hubs. In March, it announced that this model would be changing, and they would sell off their stocks and become an online marketplace only, similar to AutoTrader.

On Wednesday (8 May) Cazoo told the stock market that three of its UK subsidiaries had called in a team of restructuring experts in order to explore a potential sale or break-up of the business.