This Undervalued E-Commerce Retailer Says it's Exploration into Strategic Alternatives is Nearing Completion

Strategic Alternatives and a Turnaround in Progress are Creating a Deep Value Opportunity

This nano-cap e-commerce retailer has seen its valuation collapse in recent years from over $20 a share all the way down to a measly $0.74 per share. This is despite having a market cap of $43.6 million while holding nearly $20 million in cash, having a modest amount of debt, and a net asset value of $1.06 per share. After years of underperformance, major investments in a new automated warehouse, and a replatformed website, it looks like things are finally beginning to pay off.

This business still faces challenges though, including a heavy reliance on overseas suppliers and steep tariff exposure, but management is actively pursuing “strategic alternatives” including a potential sale of the company. With over $299 million in sales during the first half of 2025, substantial inventory assets, and a leading online presence, the company may be worth significantly more than its current share price would suggest.

I’ve been following this company for a while and this business is a substantial portion of my investment portfolio. This company has made me nervous over the past year but it does look like they are finally rounding the corner on selling off their business or finding some other way to maximize shareholder value. Let’s dig in.

CarParts.com, Inc. ($PRTS)

CarParts.com, Inc. ($PRTS) is a nano-cap company that sells car parts online through their website carparts.com, an eBay store, and Amazon store. With a stock price of $0.74, the company has a market cap of $43.6 million. PRTS also has $10 million in debt through their revolving line of credit and $19.8 million in cash giving them an enterprise value of $33.9 million. PRTS has a NAV value of $1.06 per share, a 43% upside from their current share price of $0.74.

I have written about Carparts.com twice previously here and then here. To give you the short end of a long story, PRTS’s stock has gotten hammered over the past few years. Since 2021 their valuation has fallen sharply from poor financial results. The company’s stock did reach heights of over $20 per share but now sits $0.74 per share.

PRTS has been making some major investments into its business in order to turn around its operations including moving into a warehouse that’s highly automated in Las Vegas as well as the company replatforming its website. PRTS’s warehouse move to a larger facility has been so successful that the company plans to shut down its Virginia warehouse at the end of August which should help the company to further cut down on fixed costs.

Early Signs of a Recovery

There’s some early signs that this is paying off as Mobile app and retention-driven e-commerce revenue reached record levels during the company’s 2025 Q2. The company’s mobile app now has over 1 million users and accounts for 12% of e-commerce revenues and the company’s CarParts+ membership program has surpassed over 7,000 paid members. Conversion rates, units per order, and average order value all improved over the company’s Q1.

From all of this progress the company was able to finally achieve a positive EBITDA for the first time during the last month of the company’s most recent reporting period. E-commerce driven sales are what’s largely contributed to the company’s 5% YOY increase in sales for the quarter. Things are starting to look up for PRTS as signs of operational improvement begin to show up in the company’s financials even while the extra costs of this reorganization are still weighing down on the company. PRTS also plans to achieve approximately $10 million in annualized cost savings by implementing AI into its operations.

There’s Still Some Headwinds Ahead

Even with the progress that PRTS has made they’ve still got some strong headwinds ahead of them. The company is dependent on suppliers that are located in both Taiwan and China for the majority of their products. PRTS gets approximately 20% of their private label products from China and the rest come predominantly from Taiwan with other countries also sourcing products. PRTS has $94 million worth of inventories, up from $90.4 million at the beginning of the year as the company attempted to front load its products before these latest round of tariff rates were implemented. This inventory has low obsolescence risk and no risk of spoilage.

According to the company’s last earnings call, their automotive products sourced from Taiwan are currently being subjected to tariff rates of approximately 25% while the company’s auto products from China are currently facing tariff rates ranging from 55% to 75%. While PRTS says that their competitors are implementing price increases, PRTS is anticipating that the market will take time to fully adjust to these rates and is holding off raising prices for now and instead will continue to focus on cost control efforts.

Strategic Alternatives

PRTS also incurred a one time cost this year that’s associated with the company exploring “Strategic Alternatives”. PRTS released an 8k giving more detail into this.

“We remain fully engaged in our process to explore strategic alternatives to maximize shareholder value and are highly confident that this process is nearing completion. We are currently evaluating several different transaction structures, including a potential sale of the company and strategic investments that we believe have the potential to strengthen our capabilities and unlock new growth. In all of this, our board is committed to continuing to operate in a manner that delivers value to our shareholders. That said, there can be no assurance that we will reach a transaction.” - PRTS 8K Report Dated August 12th, 2025

Conclusion

PRTS is a sitting duck for a company to swoop in and buy it up and it looks like they are putting their money where their mouth is and trying to explore just how to do this. I think that PRTS will get a lot more for their company than the small $0.74 per share that the company’s stock is currently trading for. PRTS’s NAV sits at $1.06 per share, they’ve got $94 million in inventories, and a website that sees more than 100 million views annually. The company also runs the #1 eBay store globally. The stock has gotten hammered and the valuation is so low that institutional investors simply cannot put enough money to work to make an investment worth their while.

I think the best case scenario is that PRTS sells itself off to another business that can pump more capital into it to help the company facilitate this turn around and maximize its efficiencies through scales of economy. PRTS hasn’t to my knowledge made any statements about who a prospective buyer might be but that quote I included in this article earlier was posted in all of the company’s latest documents. I expect PRTS to sell for at least their GAAP NAV value of $62.4 million but likely a lot more than that. This company has already generated $299 million in sales during their first six months of 2025 and could generate significant earnings under the right corporate governance, especially considering the abundance of assets that’ll come with PRTS should they find a buyer.

Disclosure: I am long carparts.com Inc. ($PRTS). I will buy or sell my shares anything after this newsletter is published. I am not a financial advisor. This is not investment advice. Do your own research.