TrueCar Buy Rating: Analyst Sees Strong Financial Position and Future Profitability

TrueCar receives a Buy rating from Chris Pierce at Needham due to its strong financial position and future profitability prospects. The company's cash reserves and low investor expectations present a favorable risk/reward scenario, and its expected return to profitability in H2 2025 adds to near-term confidence. Despite challenges in achieving consistent growth in units per franchise dealer, TrueCar has stabilized its operations. Pierce's updated price target is $2.75, based on a valuation of 10 times fiscal year 2026 adjusted EBITDA estimate, aligning with industry peers.

TrueCar, Inc. (NASDAQ: TRUE) released its earnings report for the second quarter of fiscal 2025 on August 6, 2025. The digital automotive marketplace reported GAAP revenue of $47.0 million, a 12.4% year-over-year increase, which exceeded analyst expectations by $2.35 million. However, the company's net loss for the quarter was $7.6 million, and GAAP earnings per share (EPS) were ($7.60), significantly below the estimated ($0.06) [1].

The company's gross margin declined sharply to 76.3% in Q2 2025, while non-GAAP free cash flow remained negative at ($4.8 million) despite operational improvements. TrueCar's unique visitor traffic declined from 7.7 million to 5.5 million, partly due to a deliberate reduction in lower-intent marketing aimed at boosting quality and conversion efficiency [1].

Key product developments included enhancements to the dealer platform, such as the launch of "Actionable Insights" and the "Motivated Buyer" feature, as well as revamped search results and vehicle detail pages for consumers. TrueCar's new vehicle unit sales grew 6.2% year-over-year in Q2 2025, outpacing the broader market's 2.8% growth [1].

Despite these advancements, TrueCar faces challenges in achieving consistent growth in units per franchise dealer and stabilizing its unique visitor traffic and dealer count. The company's cash reserves and low investor expectations present a favorable risk/reward scenario, and its expected return to profitability in H2 2025 adds to near-term confidence [2].

Chris Pierce at Needham recently assigned a Buy rating to TrueCar, citing its strong financial position and future profitability prospects. Pierce's updated price target is $2.75, based on a valuation of 10 times fiscal year 2026 adjusted EBITDA estimate, aligning with industry peers [2].

References:
[1] https://www.aol.com/finance/truecar-true-q2-revenue-jumps-020638564.html
[2] https://seekingalpha.com/news/4480263-truecar-inc-q2-2025-earnings-preview