ASX IPOs: Digital car retailer Carma flops on debut
Digital car retailer Carma debuts today at $2.70 per share with a $370m market cap, but faces a challenging backdrop. Here's why.
Mentioned
KEY POINTS
- The company forecasts 78% revenue growth in FY26 despite growing just 3.6% in FY25, while continuing to post losses of around $35 million annually.
- Carma operates a vertically integrated model similar to profitable overseas peers Carvana and Auto1, with current margins of $4,000 per vehicle expected to expand with scale.
- The IPO comes during a challenging market environment with the ASX Emerging Companies Index down 12.6% from recent highs, suggesting potential for volatile trading post-listing.
The IPO market is heating up, and I'm on a mission to take a closer look at all upcoming listings, providing key data and insights ahead of their ASX debut.
Carma (ASX: CMA) is a technology-led, full-stack digital platform for buying and selling used vehicles in Australia. It's set to debut Wednesday 5 November 2025 at 11:00 am AEDT after raising $100 million at $2.70 per share, with an indicative market cap of $370 million.
Note: Carma shares dipped to $2.47 in early trade, representing an 8.5% fall from the offer price.
Founded in 2021, Carma operates as a vertically integrated digital car retailer, managing the full lifecycle of vehicle buying and selling.
At a glance
Carma is targeting Australia's ~$118 billion pre-owned automotive retail industry. The company sources vehicles directly from consumers, auctions, and fleet partners, which are then transported to its Sydney reconditioning facility. Each car undergoes a 300-point inspection and professional reconditioning process, including mechanical checks, detailing, photography, and compliance.
Once listed online, customers can browse real-time inventory, access transparent vehicle histories, and complete the purchase entirely through Carma's website. Financing is integrated into checkout, with instant loan approvals and home delivery within days.
The company currently claims an average margin of about $4,000 per vehicle and expects margins to expand with scale.
Carma is currently loss-making, though the company is forecasting a substantial jump in revenues between FY25-26 while losses are set to remain relatively flat year-on-year. It's interesting that the company forecasts 78% revenue growth in FY25-26 despite revenues growing just 3.6% in FY24-25.
FY23 | FY24 | FY25 | FY26e | |
|---|---|---|---|---|
Revenue ($m) | 48.0 | 68.9 | 71.4 | 127.6 |
% growth | ~ | 43.5% | 3.6% | 78.7% |
EBITDA ($m) | -27.3 | -31.5 | -27.8 | -27.7 |
Loss after tax ($m) | -29.4 | -36.4 | -35.9 | -35.3 |
Pro forma historicals | Source: Carma prospectus
The criteria
Below, we'll assess whether Carma checks off the common ingredients for a successful market debut. You can read my piece about it here.
Underwritten: Yes. The IPO is underwritten by the Joint Lead Managers (Canaccord and E&P Capital). This guarantees that the company will raise the intended amount and typically makes the IPO more credible and professionally managed.
Options: The Lead Managers have not been issued any options. They will be paid an aggregate amount equal to 4.5% of the gross proceeds of the offer. It is up to the discretion of Carma to pay an additional incentive fee of up to 0.5% of gross proceeds.
Track record: Canaccord and E&P are both staple names in the capital markets and IPO space. No further commentary needed, as they support companies of all types and sizes to market.
Near-term catalysts: Offer proceeds are largely allocated to working capital ($32m), funding operating cash flows ($13m), and marketing ($12m). A key growth initiative is to roll out more "low-cost Sell-to Carma centres", which have annual costs of approximately $20,000 per location. Three centres were operational in Sydney as of August 2025, with additional sites planned to open in October 2025. Carma's growth strategy beyond FY26 includes expanding beyond NSW into Victoria, Queensland, and South Australia.
Substantial shareholders: Tiger Global will remain the largest shareholder post-IPO, with 36.6m shares (25.8%), followed by Invierta (affiliate of co-Founder and CEO Lachlan MacGregor) at 22m shares or 15.5%, and Hallierke (affiliate of co-Founder and CCO Yosuke Hall).
Time and place: The past few sessions have been relatively challenging for the broader market, largely driven by valuation concerns, weak breadth, and fading rate cut expectations. The S&P/ASX Emerging Companies Index is down 3.5% today and down 12.6% since its 14 October record high. Looking at the bigger picture, there's some hype behind this IPO given overseas peers like Carvana and Europe's Auto1. Both have rapidly scaled into profitability, with gross profit margins of 22% and 12% respectively, and operate similar vertically integrated models.
The bottom line
It's suddenly become a challenging environment for equities, and we've seen a similar-sized (and profitable at ~14.6x FY26 NPAT) name like Advanced Innergy close at 96 cents on its debut vs. its $1.00 per share IPO.
It wouldn't be surprising to see a rather cautious listing followed by volatile sideways action. The company is not yet profitable and will likely need further funds to achieve the profitable scale it's targeting.
