Flipped it: Transaction Capital CEO ousted amidst earnings SLUMP

David Hurwitz, the CEO of Transaction Capital, a majority stakeholder of WeBuyCars, has been ousted following a poor year for the company.

On Tuesday, 12 September 2023, Daily Investor reported that Transaction Capital confirmed its CEO would be stepping down.

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Hurwitz has been CEO at Transaction Capital since 2014.

The stock market reacted to the news quickly and by Tuesday morning the share price had fallen by around 20%, rubbing salt into WeBuyCars’ wounds.

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Transaction Capital’s share price has lost over 80% of its value since March 2023, when it reported a massive R1.9 billion loss year-to-date in 2023.

Shares currently trades at R5.50 versus R34.00 per share at the start of the year.

TRANSACTION CAPITAL CEO OUSTED

In parallel with this news, the firm also released a trading statement for its financial year ending 30 September 2023, and the results are not good.

Transaction Capital also backs SA Taxi – a company that offers, “complete, one-stop-shop solution for your taxipreneurs,” according to its website.

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Unfortunately, the company says the restructuring of its SA Taxi business has put pressure on its profits. That, and the underperformance of WeBuyCars – 20% down from 2022 – is to blame for the significant decrease in earnings.

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In its half-year statement, it tried to focus on the positives: “WeBuyCars has consistently gained market share in 2023, despite a tough economic environment as well as a recovery in the supply of new vehicles that have put pressure on average selling prices, margins, and inventory turns.”

FLIPPED IT GOOD

According to Daily Investor, Transaction Capital expects its net profits to be 152% lower than those of 2022.

Therefore, investors in WeBuyCars and the larger company can expect at least a R648 million net loss. Currently, WeBuyCars, SA Taxi and Nutun, a digital services company based in Gauteng, make the majority of Transaction Capital’s net profits.

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In its release, Transaction Captial was direct and straight to the point. These was zero mention of Hurwitz’s nearly decade-long contribution to the company or a thank you for his service to the group.

MOVING ALONG

Hurwitz will be replaced by Jonathan Jawno, executive director of Transaction Capital.

And, understandably, amidst its financial woes, WeBuyCars is putting a halt on any further branch expansion. It says it will, “Prioritise growing into its existing infrastructure in order to increase cost efficiencies, improve unit economics, and create operational leverage,” concluded the company.

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WeBuyCars sells in the region of 12 000 cars every month, which exceeds that of even South Africa’s most prolific new-car retailers.