Cazoo forced to restructure shares to avoid stock market delisting

cazoo

Cazoo has been forced to restructure its shares to avoid being kicked off the New York Stock Exchange.

The online used car dealer said it will consolidate investors' shares, swapping 20 for one, in a bid to shore up its battered stock price.

The company has lost 98pc of its value since listing on the New York Stock Exchange in 2021, putting it at risk of being delisted.

Rules dictate that a listed firms’ share prices must not drop below a dollar each but Cazoo is currently trading at 24 cents and has done so since last summer.

Without a reverse stock split, as the consolidation is known, the company would face being kicked off the market.

The share swap will artificially lift Cazoo’s share price to almost $5 by reducing the amount of stock in circulation.

When it listed in the US through a so-called special purpose acquisition vehicle (Spac) in 2021, Cazoo raised $1bn at a valuation of $8bn (£6.4bn). Today it is valued at $186m.

Cazoo has found the UK car market tough, as a large number of independent dealers and public pricing – which helps sellers get good prices – helps squeeze margins. Expansion overseas has also gone awry, with the company pulling out of Europe last year and cutting hundreds of jobs.

Last month the company said founder Alex Chesterman will step down as chief executive. Mr Chesterman, who made his name founding house price site Zoopla and LoveFilm, will retain his job as executive chairman and Paul Whitehead, currently chief operating officer, will replace him in the top job.

Cazoo said it would now target a more modest 40,000-50,000 car sales this year in Britain for 2023 compared to the 65,000 it sold last year. It will instead focus on higher margins and faster sales.

A Cazoo spokesman said: “The New York Stock Exchange requires listed companies to maintain an average share price above $1.00 and our share consolidation has been affected to ensure that we are in compliance with this.”