Sydney’s Carma Used Cars shares tumble on first day of ASX trading

13/1/23: Second hand car sales company Carma's founder Yosuke Hall and their director of vehicle operations Hugo Acosta and head of sales Jessica de Vries at their Alexandria warehouse. John Feder/The Australian.

Carma Used Cars has suffered a blow to its first day on the ASX, finishing Wednesday’s trading session 7.4 per cent lower.

The company priced its initial public offering last month, valuing the business at $369m or $2.70 per share. But shares ended at $2.50 on its debut.

Some market sources say they believed the company was priced at the more expensive end of the range, but the other argument as to why shares fell was that conditions had changed.

Sentiment had weakened towards digital businesses after technology giants had reported a mixed bag of quarterly earnings in the US, driving big swings in the market.

The Wall Street Journal reported that gains from upbeat earnings from Amazon.com were offset by major share price losses reported by Microsoft and Meta Platforms on the back of the former’s big spending plans and the latter’s market share losses.

The rapid growth, high valuations and outsize influence of major AI players have some on Wall Street worrying about a tech-fuelled bubble akin to the dot-com boom and bust.

Carma last month priced its deal at the top of its value range and raised $100m.

The Sydney-based digital car dealership buys used cars and resells them, with the aim of making a margin on each sale.

It believes it is catering to a gap in the market and could eventually move into profitability.

The business was founded in 2021 by former investment bankers Lachlan MacGregor (ex UBS) and Yosuke Hall (a former Goldman Sachs analyst) and they argue it is the only group to buy and sell used cars online in Australia.