Vroom’s shares fell sharply late Monday after the buying and selling platform for vehicles said it would wind down its used-vehicle ecommerce business and cut most of the associated staff.
The stock dropped 33% to 36 cents in after-hours trading, following a 20% rise at Monday’s close. The shares have fallen more than 75% in the last six months.
The company said it would cut about 800 employees, stop transactions on its website for buying and selling used cars and sell its current inventory.
Vroom has been looking to raise capital to fund operations for its ecommerce business, but said Monday that it hadn’t raised sufficient funds.
Vroom’s businesses United Auto Credit and CarStory will continue operating. The company said it was reducing about 90% of its workforce not engaged with UACC or CarStory.
The company said the move was meant to preserve liquidity and allow for maximizing stakeholder value.
Vroom announced in a regulatory filing Monday that it had amended its inventory financing and security agreement with Ally Financial. The credit line is being suspended for future vehicle purchases and Vroom must now maintain 40% of its outstanding borrowings in cash. All other financial covenants were eliminated.