TrueCar stock upgraded by JPMorgan as Fair Holdings announces acquisition

Investing.com - TrueCar (NASDAQ:TRUE) has been upgraded by JPMorgan from Underweight to Neutral following the announcement of its acquisition by Fair Holdings. According to InvestingPro data, TrueCar’s stock has shown significant momentum, surging over 53% in the past week, though current analysis suggests the stock is trading above its Fair Value.

Fair Holdings, the company owned by TrueCar founder Scott Painter, will acquire TrueCar in an all-cash transaction valued at approximately $2.55 per share. The deal represents a total equity valuation of about $227 million, offering a 72% premium over TrueCar’s closing price on October 14, prior to the announcement. InvestingPro analysis reveals the company maintains strong financial flexibility with a healthy current ratio of 4.51 and more cash than debt on its balance sheet.

The transaction is expected to close by the fourth quarter of 2025 or early first quarter of 2026, with Painter set to return as CEO upon completion. The merger agreement includes a 30-day go-shop period and specifies termination fees of approximately $4-8 million for TrueCar and about $15 million for Fair Holdings.

Financing for the deal will come primarily from a $164 million equity commitment from Alpha Auto, which is associated with multi-franchise operator Miami Lakes Automall. An additional $60 million in equity financing is expected from a syndicate of strategic and financial investors from automotive retail, finance, and technology sectors, with the remaining $3 million likely funded by TrueCar’s existing balance sheet.

The transaction values TrueCar at approximately 1.1 times JPMorgan’s estimated 2026 sales, compared to peers CarGurus and Cars.com trading at approximately 3.6 times and 0.9 times, respectively. JPMorgan noted the development is not surprising given TrueCar’s strategic review process that began in late 2024 and the challenging market conditions that delayed growth in its TrueCar+ digital retail platform.

In other recent news, TrueCar, Inc. reported its second-quarter 2025 financial results, revealing a mixed performance. The company missed earnings per share expectations, posting an EPS of -$0.09 compared to the forecasted -$0.06. However, TrueCar exceeded revenue forecasts, achieving $47 million against the anticipated $45.21 million. Additionally, TrueCar announced an agreement to be acquired by Fair Holdings, Inc., a founder-led investor group, for approximately $227 million. This acquisition will result in TrueCar being taken private, with its shares ceasing to trade on the Nasdaq Global Select Market. In analyst updates, Needham downgraded TrueCar from Buy to Hold, expressing concerns over the company’s growth trajectory. Furthermore, TrueCar disclosed the termination of its chief revenue officer, Jay Ku, effective September 1, without cause. The company plans to enter into a release and separation agreement with Mr. Ku, which will include severance benefits. These developments highlight significant changes and challenges for TrueCar.

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