Used car marketplace CarGurus spiked over 72% during its first day of trading.
The Cambridge, Massachusetts-based company had raised over $150 million after pricing its IPO at $16. By the end of trading Thursday, shares had gone up over 72%, closing at $27.58.
In a conversation earlier this morning with CarGurus CFO Jason Trevisan, he claimed that the business has become “the largest platform for both consumers and dealers to find a car.” He said that CarGurus has managed to sign up over 40,000 dealers on the platform, or over 90% of the auto dealership businesses in the U.S.
CarGurus does not make money per transaction. Instead, it’s a freemium model, with dealers paying for full functionality of the CarGurus platform.
The company also has been building out its peer-to-peer marketplace, which does not currently generate revenue. Eventually, Trevisan says that the company will sell transaction-related services like escrow, warranty or financing.
In addition to traditional car dealerships, CarGurus competes with TrueCar, Cars.com and AutoTrader.com. TrueCar initially struggled following its 2014 IPO, but turned things around two years ago.
Founded in 2006, Trevisan said CarGurus was able to shun traditional venture financing because the company was cash flow positive early on. He said that the business launched with just $4 million in funding from friends and family, but eventually raised money from mutual funds.
Revenue last year was $198.1 million. The company brought in $6.5 million in profit. This compares to $98.6 million in revenue and losses of $1.6 million in 2015.
The largest shareholders are Argonaut 22, T. Rowe Price and Allen & Co.
CarGurus hopes to use the proceeds from the IPO to further expand internationally, adding markets beyond Canada, U.K and Germany. The company also plans to do a bit of hiring, with a particular focus on developers and engineers.
The company listed on the Nasdaq.