![]() With this cash infusion, Shift was able to rehire furloughed workers, expand into Seattle and Texas, and create a national ad campaign. This transaction provided a massive boost to Shift's balance sheet, as the company went from having $18.3M in cash in September 2020 to $234M now. The company raised over $300M through this process and is now publicly traded. Shift went public through a reverse merger with Insurance Acquisition Corp. However, Shift was in a more stable position after its SPAC merger in the fall, and the company was able to once again scale-out its growth plans. By slowing down the business in Q2, management was able to reduce its cash burn rate while dealing with COVID-19 uncertainty. However, Shift was working through its SPAC merger (below), dealing with unknown variables from the pandemic, and lacking excess cash on its balance sheet at the time. Sales slowed in Q2 2020 as the company's inventory shrunk. This decline in inventory impacted revenue in Q2. Shift sold off most of its current inventory while bringing in few new vehicles. However, this adversely affected sellable inventory levels as there was a larger-than-anticipated demand spike for online vehicles in 2020. First, Shift made the decision to furlough members of its reconditioning team to reduce costs last spring. COVID-19 ImpactĬOVID-19 presented a number of unique challenges for the young startup. Results from this quiz have been positive thus far: customers using this tool are three times more likely to initiate an online car purchase than those who do not. Shift also launched a quiz-based shopping tool last quarter that helps customers filter down our inventory based on the criteria that matter most to them. This extended test period has yielded Shift a high customer satisfaction rating and strong reputation in the online vehicle marketplace. If not, they can return the car for a full refund. If the customer likes it, they continue with the purchase. Shift offers a contactless test period where they drop off the vehicle with a potential customer for a week-long trial period. Operationally, Shift's test drive process is the best in the market. Source: Shift Q4 2020 Investor Presentation In 2020 Shift launched sellers' markets in Texas, marking the company's first large-scale move out of the Pacific region. Shift was founded in San Francisco, CA, and the company has grown along the west coast in recent years. Source: Shift Initial Investor Presentation The majority of Shift's sales come from older and cheaper vehicles. One way Shift differs from its competitors is its product focus. Shift buys used vehicles from around the country, refurbishes them, and then sells them to new buyers. Shift Technologies is a young Ecommerce vehicle company similar to Carvana ( CVNA) or Vroom ( VRM), though much smaller with a $600M market cap vs. Economists do not expect the chip shortage to be alleviated until Q3 2021 at the earliest, giving us another quarter of used vehicles running the show. As you can see from the graph at the top of the page, used vehicle prices are hitting new highs and showing no signs of stopping. When automakers couldn't satisfy consumer demand, buyers looked elsewhere: the used vehicle market. ![]() Ford ( F) has had to shut down several factories in Michigan due to the chip shortage, and auto companies across the globe are projecting billions in lost earnings by the time the chip supply recovers. However, demand roared back quicker than expected, and the automotive industry is scrambling to recover. Last spring when demand dropped, auto companies curtailed their orders for future chips. Supply chain issues stemming from COVID-19 disruptions caused a massive semiconductor shortage across the globe. However, one sector has lagged behind: automobiles. Spending across the country has soared as the nation braces for its "Roaring 20s" sequel. March retail sales were up 10% from last month, a near-record performance. The US personal savings rate hit an all-time high last spring (shown below), and new data suggests that consumer demand is primed to explode. What happens when you combine trillions in stimulus, a year-long lockdown, and world-leading vaccination rates in the US? A population that wants to spend money. This is not the result of inflation or monetary policy it is a supply and demand issue. Used Vehicle Value Index, and it shows that the price of used cars has gone parabolic in 2021. Surprisingly, this is neither a Dogecoin nor a lumber chart. Shift is positioned to have a fantastic 2021 as automotive manufacturers struggle to put new vehicles on the road. ![]() Shift Technologies ( NASDAQ: SFT) is an undervalued player in the E-commerce vehicle market that specializes in lower-end, older vehicles. The used vehicle market is exploding thanks to pent-up consumer demand and supply chain issues for automobile manufacturers. Photo by Feodora Chiosea/iStock via Getty Images Thesis
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |