TrueCar Makes Darrow Permanent CEO, Analysts See Signs of Stability

TrueCar announced Tuesday that Mike Darrow, who has been the Santa Monica company's interim chief executive, now will take over the position on a permanent basis. Analysts say the move adds a measure of stability at a time when many on Wall Street saw it as a possible acquisition target.

Darrow has been with TrueCar for three years, and was put into the top leadership position after former president and CEO Chip Perry retired in May 2019. Prior to that, Darrow served as the company's executive vice president as well as head of TrueCar's ALG subsidiary.


The move adds a dose of support for a company that just a few weeks ago was rumored to be on the auction block after a disappointing earnings report. The stock has bounced around in recent days amidst the wider market volatility, dropping from about $3.66 in earlier February to Tuesday's closing price at $2.34.

"We believe this adds stability to the organization," said Andrew Boone, an analyst with JMP Securities, in a research note. He kept the company's stock rating at a "market perform."

A research note by financial services firm BTIG speculated recently that TrueCar, which operates the nation's fourth largest online automotive marketplace, was ripe for an acquisition as soon as the end of this month. "Based on our inbound call volume, we believe many investors are wondering if True is now an acquisition target," wrote analyst Marvin Fong.

TrueCar has been on a wild ride since serial entrepreneur Scott Painter founded the company in 2004.

It quickly became one of L.A.'s hottest startups after it appeared to be able to disrupt the half-century-plus relationship between consumers and auto dealerships. But dealerships were not about to go quietly, and in 2012, thousands of dealers exited the TrueCar network amidst complaints about bidding wars that meant they were losing money on transactions.

Still, the company went public two years later and shares have sunk from a high of $25.00.

In 2018, changes to Google's search algorithm caused a steep decline in TrueCar's website traffic. Just as the company was recovering from that and improving its SEO, USAA recently announced it would end its lucrative partnership, which brought in 29% of TrueCar's unit sales, in October.

USAA remains TrueCar's fourth-largest shareholder with about 9 million shares, which represents 8.5% of the stock.

Darrow said in a statement Tuesday that he's "proud of the way the company united to launch our new brand and consumer experience earlier this year, which was no small feat."

"I look forward to working with the team as we continue to innovate and deliver a modern and world-class car buying experience that appeals to consumers and dealers alike," he added.

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