Aston Villa versus Everton is not usually considered to be among the Premier League’s biggest games, but it would probably have felt like a big deal to Alex Chesterman: both teams’ shirts were emblazoned by Cazoo, the online used-car retailer founded by the serial entrepreneur.
The Cazoo derbies, both won by Villa this season, were the product of a marketing blitz, as the new company and its rivals raced to disrupt the secondhand car market. Yet Cazoo workers could think the money would have been better spent elsewhere: the company cut 750 jobs on Thursday as it warned a recession might delay its first profits.
The company’s struggles are part of a broader stock market rout, but Cazoo is not the only online used-car dealer in difficulty. A steady flow of bad news has prompted questions over whether the coronavirus pandemic-induced boom in online car sales can endure.
In the US, Carvana last month fired 2,500 workers, and its market value has slumped from $64bn (£52bn) in August 2021 to less than $5bn, a 92% drop. Smaller US rival Vroom’s market value is down 98% from September 2020. In the UK, Peter Waddell, the founder of Carzam, blamed rival Cazoo’s troubles for his inability to raise more investment, forcing him to put the start-up into receivership last week. Cazoo’s value has slumped from $7bn last year when it listed its shares in New York via a merger with a cash shell to $900m.
Rising interest rates, which tend to make investors focused on shorter-term survival rather than longer-term growth potential, have explained some of the stock rout in digital companies, ranging from the online car dealers to prominent pandemic winners such as exercise bikemaker Peloton and grocery retailer Ocado.
However, analysts are
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