VSike meteorites, unicorns, these young shoots valued at more than a billion euros, always end up touching the ground. Cazoo was a shooting star that financiers were still talking about in 2021 with bright eyes. The British start-up, specialist in the online sale of used cars, was to revolutionize the market with its attractive marketing, in a booming market.
Ostensibly shunning the financial center of London, it preferred the lights of Wall Street, with an IPO in March 2021, through a special company, the SPAC, a vehicle so fashionable at that suddenly distant time. Suddenly, the company was valued at more than 7 billion dollars (6.5 billion euros) and was going to raise more than a billion in funds to set out to conquer the world. It has been deployed in France, Germany, Portugal, bought competitors, printed itself on the jerseys of OM players…
Today, the stock market has been divided by almost ten and the company is folding the web. It announced, Tuesday, June 7, the departure of 750 of its employees, or 15% of its staff. This is just the beginning. Cazoo is losing a lot of money (650 million euros for 790 million in turnover), and is therefore conscientiously burning the billions it has managed to borrow from investors. However, the times are no longer for adventures financed on credit. Even giants like Netflix, Tesla or Amazon are launching savings plans and lowering their ambitions.
The time for easy money comes to an abrupt end
The reason is simple, as recognized by London society. A perfect storm where the ill winds of inflation, supply disruptions and interest rate hikes mingle. In 2021, however, the sky was so clear… Shortages of automotive components boosted the second-hand market for a while. But this lack of new cars ended up translating into a shortage of recent second-hand cars and therefore a rise in prices, which gradually drove buyers away. They are also faced with an inflation not seen for forty years in the United Kingdom. So we make choices, we postpone our big purchases. Especially as loans become more expensive.
Investors have not disappeared, but they are becoming increasingly cautious about new central bank policy
There is no fatality in this job. The French Aramis, the main competitor of the British in Europe, older in the business, was profitable until 2021, when the shortage of new cars also affected it. He has also taken refuge in the bosom of Stellantis, which controls the majority of the capital. But times are going to be tough for unicorns and other internet or digital stars. From glory to pain, Cazoo’s misadventure is set to recur in the world of technology companies.
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