Editors' Note: This article is the transcript of our podcast discussion with Cliff Banks on Cars.com, published last Tuesday. We hope you find the transcript helpful.
Daniel Shvartsman: We return to Cars.com on this week's Behind The Idea. Covering the company with Cliff Banks, an analyst and reporter in the auto retail space over the past two decades as well a commenter on Seeking Alpha. Since CARS is a web company it is levered to the giants, Google and Facebook. But Cliff points out that the company brings value to those companies as well.
Cliff Banks: And Google (GOOG) is looking for companies that can provide traffic, that performs, that convert. So for Google it's in their best interests to find the right company to work with within the space.
DS: We also discussed the inevitability of consolidation in this sector and he calls out a reason for bullishness for CARS' investors.
CB: Yeah, Thoma Bravo has picked up a company called Autodata Solutions. They own the listing service in Canada, this Autodata Solutions, I would be shocked if that was, Thoma Bravo's only play in the automobile space here in US.
DS: We covered the company four weeks ago from their perspective of value play or value track and we leaned more towards the latter. But thanks to good comments from our readers, including Cliff, we had an opportunity to look closer. So is there still value under the hood? We discuss on this week's Behind The Idea.
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Mike Taylor: Welcome to Behind the Idea. I'm Mike Taylor.
DS: And I am Daniel Shvartsman.
MT: Today we're reviewing Cars.com again. I didn't write that, Daniel did. It's redundant, Daniel. Today we are reviewing Cars.com again.It's good to throw your co-host under the bus in the introduction.
We're reviewing Cars.com, ticker symbol, CARS. We covered the company in early June, based on a Seeking Alpha short idea by BOOX Research and we looked into whether the company was a potential value trap. The stock is pretty much in the same place a month later. Some M&A buzz and the presence of activists, I would say even controversial activist, Starboard Value has had added some wrinkles to the discussion. And one of the commenters on our podcast who chimed in was CBanks40, a.k.a. Cliff Banks, who runs the Banks Report, an online report dedicated to the auto retail industry.
So clearly he has some good points made about Cars.com and we are very excited to dig in the story with him today. Before we begin Behind The Idea is the podcast that what makes great investment analysis work based on ideas from the Seeking Alpha ecosystem. Neither Daniel, Cliff nor I, Mike Taylor have any positions in any stocks we expect to discuss and as ever nothing on this podcast should be taken as investment advice of any sorts. And one final note before we get into it, people have been wondering where I was. I was on vacation. So you will continue to hear my voice. I’ve not been fired from the podcast, much as Daniel might like to do that.
DS: Never, never. It's good to have you back, Mike.
MT: Thank you. So with all that housekeeping out of the way, welcome Cliff Banks to Behind The Idea.
CB: Thanks guys. Great to be here with you.
MT: Great, great. So let's just dive right into it, Cliff. I think one of the main questions that came up in our initial discussion was the media ecosystem for sales leads and reaching an audience who is interested in making an auto purchase. It's confusing, who is a competitor, who is a partner and how all these players fit together in the industry. So Cars.com has a specific role in reaching potential customers for car dealers. What are the relationship between Carvana (CVNA), CarMax (KMX), AutoNation (AN) and Cars.com from your point of view?
CB: Okay, so when you look at that ecosystem and before I address specifically the companies that you mentioned Carvana, AutoNation, CarMax, those three would be customers of Cars.com. So they would pay Cars.com money to list their inventory and however the contract is, whether it's a subscription-based, per lead or monthly, what have you, they pay Cars.com to list their inventory on the Cars.com site.
Now there maybe other things attached to that revenue also, or to those relationships such as advertising on Cars.com, participating in the social marketing program that engages with Facebook (FB). So Cars has number of opportunities for car dealers. But Carvana and CarMax in our relation, are car dealers. Carvana has generated a lot of buzz lately mainly because it's an online. It sells cars online. It's nothing more than a used car dealer with a "national presence." They have been expanding their presence significantly, expanding the markets. But they are simply a car dealer.
So they employ companies like our Cars.com and CarMax which has been around for years. Same thing I mean they are a car dealer, a used car dealer but nevertheless still a car dealer. And AutoNation is a new car franchise dealer, the largest in the country and they also would use Cars.com. So that would be the relationship between those.
Now on the competitive side Cars.com competes with CarGurus (CARG), which is another public traded company. It's much stronger in the last couple of years. And also Autotrader which is own by Cox Automotive of the Cox Enterprise, and a company such a True Car (TRUE) which is a publicly traded company we can talk about little bit later. Edmunds is another one that would compete with Cars.com on the traffic leads out of the business.
MT: Okay, so just to put a kind of point on it, with the dealerships what does Cars.com do that the dealers can't or don’t do for themselves?
CB: Yeah, you might get different answers here from different people, but Cars.com has a national presence, and has spent a lot of money on national and even local advertising and provide a platform for dealers to list their inventory, so customers can search for vehicles. Now it's always, it's been since the advent of the third party classifieds or listings, online lead generators, as we sometimes call them in the industry, it's been sort of a love hate relationship between the dealers and companies like Cars.com because I think they would view CARS, Autotrader, CarGurus kind of as maybe a necessary evil, it could be described as that .
So acting as a middleman between the customer and the dealership but the fact is that the customer when you are shopping for vehicle Cars.com they can provide services that a dealer can’t provide, such as I'm able to like plug in every kind of filter imaginable and the geographic area in which I want to search for vehicle and I will find -- see pretty much a vehicle that's for sale and the dealership or use private listings within that geographic area based upon my search criteria. A dealer -- if I’m looking at the dealership website I’m only looking at the vehicles on the dealership website. So to me as a customer first place I’m going to go, if I’m searching for a vehicle, one of the AutoTrader, Cars.com, Car Gurus one of those, if not all.
And I think we see that in the traffic numbers also. The problem, the challenge for dealers is what they're paying at Car.scom to list that inventory it's hard to say what's that return on investment, does it justify prices they are paying these companies. For a while Autotrader and Cars.com were able to adjust to pricing based on that, but as CarGurus is come in and placed some more pressure, and, I think, provided another outlet for those dealers to use -- to do some adjustment in prices. Although with CARS we've seen the per dealership price, per dealership revenue pull up from a continued decline even as some of the dealership I would say have declined over the last several quarters.
I think they have started to change now, but it's a -- as a dealer you have to determine whether -- what you are paying cars arbitrator are -- either justifies what you think your return on investment, and allowed you to say look I’m not getting the traffic, I thought I was going to get, start trading in sales. So CARS and I would say these companies spend a lot of money trying to prove their value, trying to prove their attribution -- CARS needs to prove the attribution model. So that's just not always clear. I bought a vehicle last year and ended up buying a new vehicle that was on the Cars.com website, the dealer never knew until I completed the transaction that I had actually found it through Cars.com or found the vehicle.
So sometimes a traffic or like term that is always apparent to the dealer. So CARS I mean there's been this battle versus the industry on that attribution but to me as a customer, I think it's incredible value, I see where the dealer would be a little less enthusiastic.
DS: Cliff, what is the dynamic then there -- you're kind hinting at it, but where is the leverage in that dealer versus Cars.com relationship? I would guess it sounds like CARS aggregates demand and makes it easy -- your life easy and then they can tell the dealer we bring you all this demand. And so we get -- that gives us some leverage in terms of terms and part of what I wonder is you talked about Carvana for example, earlier as a national presence and to me that in theory that's the other side. If base and you talked to even more revenue per dealership but fewer dealerships. Is that sort of -- it reminds me of the healthcare industry a little bit, but is that where it just going to be dealers get gross up a little more and then try to fight back for some more leverage against an AutoTrader or Cars.com, or is that the sort of the dynamic there?
CB: Yes been the dynamic for years. Actually it's not a new phenomenon. But again I think as technology has improved we're seeing Cars.com, this from because it's a publicly traded company so we have a little bit more of a window there to than even what we would have arbitrated but Cars.com has start working and has worked pretty effectively with companies like Facebook and has created some intriguing products and solutions to your relationship with Facebook.
They've worked pretty close with Google and we’ve seen that this past year, regarding traffic and SEO related efforts. They -- so and in CARS also we will talk, perhaps you will talk a bit more in-depth about the dealers there, acquisition last year but that provides another layer or another avenue that the CARS has to work and be more valuable for car dealers. And as you start to integrate all of the back end in over the traffic that goes to the Dealer Inspire websites that dealers employ with Cars.com platform, I think that’s a good thing for Cars.com in terms of their sales pitch to the dealers.
And I think too we are starting to see some of that dynamic, I mean CARS was getting hammered there for a while but I think we are seeing some of that change. We're seeing anecdotally and I think even in the numbers we are going to start seeing that terms of dealership numbers I think to decline, it's going to stop if not already. And they start moving more towards that positive per month gain. I would be surprised if we don’t see that happen.
MT: Cliff could you -- there is a lot unpack in that response, so let's go -- I want to start by getting a little bit more specific about the relationship between Google, Facebook and Cars.com. So you mentioned some interesting projects that are working. Can you elaborate on that at all?
CB: Well, the Facebook relationship they're able to do leads right to Facebook messenger. So there's a chat component of lead generation to dealers, that they working with that with Facebook, but CARS is also able to place inventory, dealership inventory right on Facebook within the marketplace ads. So there's -- and based upon the AI data that you are able to target pretty well, customers who are looking for specific vehicles, I think we're going to -- I’m not sure how much the company has talked about it. I think there's been couple of articles and a couple of the marketing related magazines but there are issues but they haven't really talked about it publicly that much. So I don’t know if that indicates it hasn't gone as well as they wanted it to.
I know for a while, in their first quarter, Facebook was a pretty fast moving segment for them. And there is nothing that precludes their competitors from doing the same thing. But CARS does seem to have a particular relationship with Facebook, is pretty strong based on my conversations with both Facebook and Cars.com internal people.
Now the Google relationship's a little bit -- that's where you get really wonky on the search technology and algorithms that Google put out or changes every so often. Apparently there was an algorithm change depending on who talked to, and they happened to think it depending on who you talked to the impact is negligible, it was pretty severe on the companies space but yet CARS seem to weather that pretty well. But I don’t know if that's a long-term dynamic. It's probably more short-term but the fact is, I mean CARS, and I think also the acquisition of Dealer Inspire they have been able to manage that pretty well, that relationship with Google very well. And Google is looking for companies that can provide traffic that performs, that converts.
So for Google it's in their best interests to find the right company to work with within the space because dealers have been particular. They can say look, I'm spending this much money in -- with this agency or search engine, on search-related initiatives but I’m not getting the traffic or it's not good traffic than that makes Google look bad. And so they have been -- they say they have been dealing -- there is something that Google's actually been working very hard at too and so it's -- it is not something you can justify their spend that they are getting from dealers on the new stuff in there, they are managing expense with dealers.
So they need to justify this. So you need to stay on top of what those algorithm changes are, how they impact, all of the search patterns and the traffic as it come to dealership websites or through the CARS or Autotrader website. But it did seem like a least earlier this year CARS you know managed to navigate this algorithm change pretty, well much better than some of the other companies have done. And I like you said you have to really -- don’t ask me to explain about the algorithm technology, that’s like black magic to me. They explain it to me, I don't know. All I know is I type and say, something, Google's pretty good at knowing what I’m looking for so.
MT: I like that point because there's a lot of news around right now about how Google and Facebook have a lot of content, that’s maybe not serving the users' best interest. We don’t need to get into the type of content that it might be. But it's on YouTube or on Facebook and even in my own just personal use of Google I found it to be a little bit harder to find useful information on some levels. And so I think it's -- this is an interesting point that Google is partnering with purveyors of higher quality or more useful or more transaction-oriented content to give a better search experience. I think we have a lot of information coming at us that suggests that’s not in these companies best interest. But you made a point very effectively, I think that, it is in their interest.
CB: Yeah, I think it is very much is. But it’s a constantly moving target, I think here today isn't true tomorrow in terms of the algorithms or -- and even the technology. So and to be fair too, I would have to say a company like Google and Facebook would be -- I mean they are partners but there also competitors to some extent with Cars.com and CarGurus and Autotraders of the world because they are competing in a way for that money from the dealer.
So Facebook has become much more effective I think in advertising for the dealer, more of that money is going toward Facebook initiatives. So as Cars.com been able to set themselves a bit -- been able to leverage some of that relationship to make sure they are getting some of that money. implying maybe an effective channels from which to move that data through. And I think what's also -- what's been -- what's in Cars.com favorite area and even on the Google what's Cars.com favorite is just the scrutiny on the data practices, the data that comes like Facebook and Google have and they are very limited on specific and careful with the data log. There is been some restraints put on them as to how they can manage that data.
So now -- and I think you used the term first party audience data, well I think that’s part of Cars.com play that we have all of this data and so Facebook needs to use our data, needs to relay on our data now, as opposed to not having to rely on our data. So I think there is a stronger argument for third-party listing sites such as Cars.com or AutoTrader, CarGurus. So it is an interesting dynamic that is I think constantly evolving and since both competitor and cooptition maybe is the way to put it.
MT: Yeah, okay real quick on that, the regulatory differences -- what -- how does cars have an advantage over Google? This is surprising to me how is CARS, -- how does CARS have a advantage over Facebook and Google with respect to regulation? You mentioned that California Law, could you talk a little more about that?
CB: We don’t know yet fully the impact of what the California Law is going to have overall, and I think that’s going to probably spread nationally over time. It's hard to make a projection but just because it's changing I think this is going to be a long battle, a long conversation. However, Facebook has a lot of data, but I think there is restrains on how they can use that data. But if they can use a third-party company that has data that they don't have access to, but they're able to let -- when I say access I mean they don't see who it is but they are able to leverage that data to create better targeting for customers and they are using data that's not their own, I think it makes this little bit better for Facebook and Google.
And there are people far more well versed in this than I am but I’m talking for a very high level view here. I know -- there's been a lot of impact on the agency business just because of the data conversation and certainly Facebook and Google has come under significant scrutiny over the last months regarding the use of data.
DS: Cliff, sort of -- I think this is because you have mentioned within these lines, but could you talk a little bit more Dealer Inspire because I think we sort of touched on briefly last time and it came up a little bit of the comments and you'd mentioned for example, CDK Global (CDK) and their sort of association with or their commercial relationship with GM (GM) and how that was going to be opportunity. I guess just it sounds like this is a piece of this puzzle here and so maybe or maybe a misunderstanding, but could you just clarify like what's going on with Dealer Inspire, why is that important to the CARS story and how should people think about it?
CB: Okay, so from a high level view, first of all Dealer Inspire is a website -- provides websites to dealerships. Now along with that you provide marketing services, digital marketing services also. So I think they would prefer to call themselves a platform, which is state-of-the-art, for dealers. But so CARS has been working to integrate the Dealer Inspire Cars.com platform. The lay-offs at Cars.com over the winter, December and January was actually a large portion was from the technology side, in which that was an ongoing process, they were working to integrate the platform, so basic build out one complete platform for the two companies.
Now you mentioned CDK Global. CDK is a $2.4 billion company or so. The provide dealer management systems to dealerships. They are the leader in that space. The other company that they compete heavily with is Reynolds and Reynolds, out of Ohio, Texas. Between the two they control between 70%, 75% of that DMS, dealer management system market.
Now CDK also has their digital advertising by CDK Digital and they just announced in the last couple of weeks that they are going to spin that off. It’s a much smaller piece of the business, probably by the end -- CDK operates on the fiscal year July to July or June to June. So see what the main numbers look like in the next couple of weeks they do their earnings. But they are going to spin it off, and the reason they are spinning it off is because that business has been declining significantly for CDK. It’s been a drag on their earnings. And they have not been able to change that in the last several quarters.
So this was not a surprise, I think for dealers -- you talk to dealers, the people in the industry probably was surprise, I talked to analyst and investors probably not a surprise at all, I think so, several that I talked to saw this coming even as early as last year. So Dealer Inspire competes with CDK Digital. CDK Digital also provides websites and digital advertising services for dealers. The main customer GM -- CDK's main customer is General Motors on the dealership websites.
GM informed its dealers at January that they were going to open that up, the website business up to other vendors. We were thinking it was going to be third quarter, beginning of fourth quarter this year. I’m getting worried, I haven't confirmed this yet, but that work, that they have pushed that back to next year, first quarter of next year. So we are thinking maybe Dealer Inspire and some website companies would have some access, what earlier this year, I don’t think is going to happen.
Rumors are Dealer Inspire is on that list, will be on that list of approved vendors for GM, but GM is saying publicly they have not made any decision whatsoever regarding any vendors that might be part of their website program and digital advertising programs. So that’s going to be something that we're still months away from knowing. However, if it does progress the way we expect, and I would fully expect Dealer Inspire be on that list, they would have pretty good access, there is some, I think internal numbers or some numbers that I forget. All of this internal might be an analyst driven number but they estimated Dealer Inspire could double its revenue if they were able to gain 25% of the GM dealers that would be on the market. They got just 25% and they doubled their revenue.
Yeah, listen, Dealer Inspire from a revenue prospective is that not big of a chunk for Cars.com. It's a significant but it's not huge. So I don’t want to overstate that but I think for Dealers Inspire could be a much, much bigger, an important part to that Cars.com conversation with the dealer. So I will tell you this relationship or this ecosystem on the website world, advertise and digital advertise world is changing and I think we will see some players, I think who -- we have to see what CARS or what Auto Trader or Cox Automotive decides to do with Dealer.com which is the other big player in the space. They've had their challenges too over the last couple of years.
But listen Dealer Inspire relationship puts Cars.com in a much stronger position, I believe, most in the market and I think you from an investment perspective, but again I'll just reiterate what you said at the beginning don’t take anything I say for investment advice please.
MT: Sure, so Cliff one question that’s kind on a different track but we want to make sure we hit this Starboard Value and the activist case with Cars.com it seems like the commenter's on our first podcast were really many were not fans of Starboard or felt as though that was a hindrance to the long-term investment case. And I usually think of activism as being more of a positive for shareholders. So I'm wondering what your thoughts are on Starboard value and how you sort of interpret the events around that.
CB: Yeah, they've -- Starboard has a reputation, I mean very aggressive and almost ruthless, I guess to use, maybe it's somewhat better when it comes there -- actually with companies they invested in. But they do have also I think it's a good track record shareholder value. They been very quiet since their letter that they sent in December to the Cars.com Board telling them to try to shift or going to make changes. I think part of their, I think there's probably a couple ways of looking at the relationship right now. Starboard is remaining quiet because they are convinced that a deal was in play and that there will be a deal made for Cars.com this year.
And that can be seen as a positive, if you tend to I think on the negative side, you've seen Starboard is in a tough spot, got themselves in a tough spot because if they make changes it's going to probably drive the stock price down for a while and they are going to be stuck with a company for little while longer, than what they hoped to be. I don’t know where the truth is between those two scenarios. Nobody on a management team or Board if you are running a company wants to see an activist investor get involved. No one does, I mean it creates a lot of havoc.
I think the perspective of activist investors tend to be short term, not long-term. But it's hard to argue there against their effectiveness in short-term for shareholder value. Now we haven't seen it yet with Cars.com. That mean their price seem to be -- and assessing has been so perplexing with Cars.com over the last several months, that's just why their stock price is so depressed because we think there's a minimum to meet $30 a share right now but, and that would be a minimum call.
I think there is been some strong short interest or short -- shorts action on Cars.com. I think also the lack of news that's come out of the company regarding any kind of a process, sales process has created a perception in the market that they is not something going on. I will say this, I know a couple of the conversations that have gone and they been pretty substantial with cars.com. And the Board, the management team is consistent in its proclamations, with its public statements and has been from the beginning in January that look there is a process we're discussing with multiple players and we have no timeline.
So the reality, they made that announcement in January and probably at the direction of Starboard. I don't know that they would've made an announcement or even looked to put the company up for sale if it hadn't been for Starboard's involvement. And so the process really doesn't start until mid-to-late January. We are in July. There is a perception and it's been a long time, a long process. I don't know that I wouldn't say that it's been that long. That I’m usually so, but I do think that there is -- that the lack of news, and some of the news that we have seen, Carvana being a buyer, CDK Global in January was rumored to be a buyer, in January. I mean that was -- there was no truth to that.
And the Carvana one just makes absolutely no sense because of the nature of the relationship. I mean they are a customer of Cars.com. The minute -- if Carvana were to buy Cars.com every dealership in the world that use Cars.com would cancel their contract with CARS, so -- because they would see Carvana as being a competitor. So it is a little bit puzzling us to why that stock price is down because I don’t think that the -- I haven't seen the Board or the management team do anything -- agree just to make it so. But I think there is some short -- I think there is some people that have -- and in fact also probably Starboard was talking about the management team early on negatively and that may have helped create a perception in the market and maybe they were a little too aggressive early on as part of their pitch.
DS: Cliff, so just it is interesting with that answer and you kind again said is that even from your early comments you felt more positive about the company, but I guess just what is the sort of bull case in your view, like what is this a growing sort of steady grower, is there going to be some transformation as Dealer Inspire enables them to get more dealers going in sort of increased liquidity, that way or what is your case, you said 30 would be more or less 50% upside, what your case there, just to kind of put a point on it.
CB: I think they have lot of opportunity just on the website part of the business. Maybe it's a little longer term than what we had originally thought, but Dealer Inspire is well thought, has a great reputation in the industry. The other bull case is, I think part of the positive side is CARS still has an affiliate, pretty hefty affiliate contract with Gannett (GCI). There's couple of other smaller players also but it's not many. And that affiliate contract is just basically a holdover from this spin-out from Tegna (TGNA), and even prior to that, as it really goes back to their days of classified ventures on five different media properties.
So that’s kind of been in place from the beginning. The Gannett relationship is supposed to end in 2021. I would imagine that CARS has been negotiating with Gannett to pretty aggressively to find a way to move that up and that relationship may be as early as next year, over the next several months and that would represent a bump in cash for Cars.com, probably there's bump in cash flow.
I think the other bull case, when I look at the market, let's talk about the M&A part here. I think at the moment we're kind of in a buyer's market in the automotive retail space. There is at least six companies, including Cars.com, six companies I know that are in various stages of the sales process. They each have bankers, and you either take a biz or close to crossing the finish line, and there could be as many as eight significant in the automotive retail space from the vendor side, all deals probably ranging from $250 million to over $1 billion maybe a 250 million is probably even small, it's probably more.
So even if you are looking at CARS or something else, that could exceed $2 billion to $2.5 billion. So what we have hit right now is a sellers -- is a buyer's market. One, I think some of the trade talk coming out of Washington DC with the tariffs, potential tariffs, combined with sales numbers plateauing or declining on the new car side that's created a little bit of a pause in the action. Last year there were 81 deals, investments and acquisitions in the automotive retail space. This year we're pushing 26 maybe right now. I think that was my last check I've got a report coming out next week on this. But kind of have hit a trough, say may be one reason why CARS hasn't completed something yet.
The other thing is with these players, I mean JD Power, I'll talk about the ones publicly that have announced, JD Power, CDK Global, there may be some bigger conversations going on in terms of roll-up strategies on the part of some of these bigger private equity firms that have exhibited interest in the space. So I think there's a lot of interesting conversations to be had, or that could be going on right now between some of the bigger players in terms of putting some of these placed together. Thoma Bravo just picked up a company called AutoData Solutions. They own the listing service in Canada, this AutoData Solutions. I would be shocked if that was Thoma Bravo's only play in the automobile space here in the U.S.
There would be a strong case to be made to adding Cars.com to that mix, or JD Power. I’m just saying there is a lot of intriguing possibilities right now. Listen I mean Gannett's rumor right now, it seems to be talking with Gatehouse Media (NEWM). I think they -- those two were to get together and I think Cars.com would be a very attractive property for them, it's very attractive. So I think there are players that are out there that maybe the timing isn't just right, maybe some other things have to happen, but to me what I look at the -- when I look at the arena out there, I think there is several strong cases to be made for Cars.com to be part of or to be partnered with some these companies. I think there's a lot of value that could be driven there for shareholder and even for customers and dealers.
So I think it's -- right now we are just the market is in a weird place right now and I think that's -- maybe if it was last year or even year before Cars.com deal would have been done immediately, but now with the number of players out there looking to buy in, looking to sell combined with all of the somewhat negativity surrounding the space at the moment which is some of its unfounded by opinion, because and I think we talked before we mentioned some of the cyclical nature of this that we talked offline guys, but Cars.com is not just a new car player and the problem is when we look at the automotive space too often we look at new car sales numbers and they declined by half a million or -- oh, my gosh! The new market stinks. You have this whole other world of used cars and we're looking at probably record what might be record selling year for used cars. And Cars.com is a big player in that space.
So I don't think a downturn in new car sales hurts Cars.com at all. In fact may even help them on the new car side because dealers are looking, have to be much more discerning in where they put their advertising money and I think CARS makes pretty strong case to its dealers, that hey we got the more effective platform here. So I don’t know if that answers your question, but I do think that stock prices is too low based upon what I know about this market and what's going on under their radar.
And the other thing is too, I think even from an agency side, we talked about Google being becoming -- probably evaluating its partnership much more closely, and I think there is some opportunity there for CARS also because I think some of these agencies are going to have hard time competing long-term over the next couple of years and there is going to be a big shake out on the ad agency part. And I think the bigger players are going to have a much stronger -- are going to be in a much stronger position to capture share into expanded business and I think CARS is part of that but certainly with their relationship with Dealer Inspire.
DS: Okay that's a really full case for the -- in terms of both their the different contractual relationships and just -- yeah, it seems like they have and that maybe a reflection of investor impatience when you start looking at a story and don’t see anything happen. And they had a quarter or two where the revenue growth wasn't really there and you get impatient and so it's interesting to hear all the different things sort of under the hood that might turn into something more positive.
CB: I think just another part of the story we haven't really talked about is TrueCar, which is at some level a competitor with Cars.com and they had their issues, just recently cleaned house with the management team. So there is some things going on there. I think that can work in Cars.com favor. And I see Cars.com probably in Autotrader's and CarGurus favor also. Because those three are the big three, AutoTrader, CARS, and CarGurus.
DS: And True Car turmoil will open up opportunities for those bigger players.
CB: Yeah I think so. True Car still has pretty significant dealer base I think 9, 10, I don’t know I haven't got the numbers right now, 11000 dealerships. But they are going to have a -- it's going to be harder for them over that, just because some of the challenges that they've had with some of their affiliate relationships such as USAA, I think just from an investor perspective it's going to be a tough slot for True Car. And so as a result some of that -- there's some increase from opportunities to expect -- to gain share so to speak and I don’t like talking about market share for like a car with the listed companies because as a dealer I could even use all three or four or five, I’m not limited to one.
So it's hard to really I think quantify that market share number, market share number but just in terms of doing away with the pretty competitor like True Car which takes money out of it. I think there is an opportunity for them to take business away from True Car.
DS: Okay, well Cliff, I think we can wrap there. I think there is lot of good stuff there about the industry and about CARS and what they're going through and what they're trying to do. And so really appreciate you first commenting on the original podcast but then taking the time today to come speak with us about it and just share, what you are seeing, what you're hearing and I think it gives for people following that it gives a lot of things to think about it and unpack as they are looking at the stock.
MT: Thank you, Cliff.
CB: It's been a fascinating relation, and great conversation. Very good questions.
MT: Well thanks very much. Great to have you on.
CB: Thank you, appreciate. Have a great weekend.
MT: All right you too Cliff. Take care.
CB: Thanks, yeah, bye-bye.
Disclosure: I am/we are long GOOG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: Daniel is long GOOG (opened after the podcast was published). Neither Mike nor Cliff have any positions in any stocks mentioned. Nothing on this podcast should be taken as investment advice.