The past few days have been very good for CarGurus (NASDAQ:CARG), the online auto broker which seeks to make purchasing cars easier for both dealers and consumers. The Investor's Business Daily reports that CarGurus raised $150 million by selling 9.4 million shares at $16, and the stock has exploded in value ever since. After getting close to $30 per share on Thursday and Friday, the stock eclipsed that limit on Monday and nearly reached $35 before closing on Monday at $31.85.
Investors who got in at the $16 price should feel great, but is CarGurus worth buying at the new elevated price? On one hand, CarGurus is the rare tech IPO which can claim to be profitable and have growing revenue. Its market is large and CarGurus has clear avenues of expansion.
Yet despite all of these positive signs, investing during the post-IPO hype stage is always risky and CarGurus is no exception given its small size. Investors should hold off for now, but consider buying the stock later when the IPO glow inevitably fades away.
