TrueCar (TRUE) Stock Falls As Amazon Vehicles Poses Threat

Shares of TrueCar Inc. (NASDAQ:TRUE) tanked nearly 10% yesterday after e-Commerce giant Amazon.com Inc. (NASDAQ:AMZN) launched a new online platform – Amazon Vehicles – to help customers research both new and classic cars in great depth.

What is Amazon Vehicles?

The new web platform will allow visitors to browse over thousands of new and classic car models with intricate details on specifications, images and reviews. The webpage provides information including price and power, along with a proper comparison with previous models.

For now at least, the company has launched the website only for exploring car models, and not buying them.

Nevertheless, we believe that the platform will complement the Amazon Automotive business, which through its namesake web portal, offers millions of vehicles parts and accessories.

Why is it a Reason for Concern?

Amazon’s latest offering has posed major competitive challenges to TrueCar. Through its website – TrueCar.com, the company provides market-based pricing data on new and used cars, as also enabling users to connect with a network of TrueCar-certified auto dealers.

Although Amazon Vehicles is still not identical to TrueCar’s website, if Amazon does venture further into the automotive business, it could pose serious threat to a number of players in the space. This is because of the company’s enormous resources and technology to expand the scale of the business further.

Apart from TrueCar, Autobytel Inc. (NASDAQ:ABTL) and eBay Inc. (NASDAQ:EBAY) should also be threatened by Amazon’s recently launched website. Shares of Autobytel, which has a more or less similar business model as that of TrueCar, lost over 5% on the news. Meanwhile, eBay’s vehicle parts and accessories business may also be affected by Amazon Vehicles.

Currently, TrueCar carries a Zacks Rank #2 (Buy).