CryptoFundManager

VRM Vroom ready for an Epic Squeeze!

Long
NASDAQ:VRM   Vroom, Inc
Have you seen so many bullish divergencies on a daily chart before? Neither do i!
A bullish divergence occurs when prices fall to a new low while an oscillator fails to reach a new low, demonstrating that bears are losing power, and that bulls are ready to control the market again.
A bullish divergence marks the end of a downtrend typically.

What should we expect from the May 9th earnings?
- revenue growth! last quarter their Ecommerce revenue was $738.7 million, up 159% year over year; gross profit was also up a lot, 64% YoY!
- a strong financing business! On February 01, 2022, Vroom announced the successful completion of its acquisition of United Auto Credit Corporation (UACC), a proven leader in automotive finance for $300 Mil.

Soon after the news above was released, on 2/3/2022, Bank of America set a price target for VRM of $30.00
So how come it is trading at $1.66???

Well, 29.48% of the share float is Shorted!
Big institutional owners like Vanguard, Blackrock , Morgan Stanley , JPMorgan Chase have average entries at $40!
And many of them had recently averaged down their investment, like Goldman Sachs which reported on 2/17/2022 an increase of 104.5% in their ownership in VRM , respectively 1,753,977 shares worth $18.93Mil for a total of 1.281% of the company. Their average is now $22.55.
So if they are happy with a 22 average, how come we don`t we buy it at $1.66?

VRM has a Price to book ratio of 0.24 now.
A P/B ratio less than 1 means that the stock is trading at less than its book value, it`s way undervalued!
the Price to Sales ratio is only 0.07! By comparison, its rival, CVNA (Carvana), has a P/S of 1.16.
Based on Q4 Financials, If they liquidated the inventory, cash in on all receivables and pay off the
$600M senior note, each shareholder will receive approximatively $6.5 per share.

If we look at the daily timeframe , VRM formed a falling wedge pattern which is extremely bullish as you know, on an oversold area, 25 on the RSI .

Institutional ownership in VRM is high, 92.19%
52 Week Range 1.58 - 48.80
Market Cap of only $235.47Mil! Can be a buyout at this point!
2021 Revenue: $3.18Bil

All things considered, fundamental and technical analysis , my short term price target for VRM is $5.95, i think it`s trading so low because it`s heavily shorted by the hedge funds, to have a better average on their entry.

Looking forward to read your opinion about it!

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