Such a foundation may not appear until insiders are finished selling those 17.6M shares. Regardless, SFT needs to stabilize before it becomes attractive again. Perhaps Autonation ( AN) is the valuation "north star" at a relative bargain basement of 0.4 P/S. However, the valuation is similar to Carmax ( KMX) at 0.9 P/S and Vroom ( VRM) at 0.8 P/S. At some point, SFT may become an irresistible "bargain." Selling at 0.8 times sales, SFT is relatively cheaper than the likes of Carvana ( CVNA) at 2.1 price/sales (P/S). The overhang from the insider shares could weigh on the stock for some time given the uncertainty of how and when these sales will flush through the system. While the results look strong for Shift, the poor trading action is stronger for now. In the wake of the post-earnings fade, I decided to sell my shares in Shift Technologies. Shift refocused marketing on brand advertising.Significant growth expectations for 2022 will require expanding inventory.
Announced major hiring initiative for Q4 to expand sales team in preparation for 2022 to get "ahead of the curve".Maintained midterm 2022 goal of $2,500 GPU (target is not dependent on sales volumes and instead comes from other operational efficiencies).The GPU guidance includes some conservatism based on challenges Shift experienced in prior Q4s. Increased FY 2021 revenue guidance from $575 - 595M to $621 - $629M and adjusted GPU from over $1,800 to over $2,000.New quarterly record GPU in back-end offerings, particularly finance and insurance (F&I).Net loss increased from $23.3M to $37.4M year-over-year.Increased Gross Profit per Unit GPU 58% YoY.Increased ecommerce Average Selling Price (ASP) 43% mainly from price appreciation and some mix effects from selling fewer cheaper cars.Decreased customer acquisition cost (CAC) 12% sequentially and 52% from Q1.Increased ecommerce car sales 120% year-over-year (YoY).Here are some key highlights from the third quarter earnings report: City Average, retrieved from FRED, Federal Reserve Bank of St. Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers: Used Cars and Trucks in U.S. (For more context, used car prices last peaked between 19). October's average CPI for used cars and trucks made a new marginal all-time high. However, Shift only mentioned expectations for a seasonal slowdown in prices for Q4. Strong demand and dwindling inventories are combining to drive prices ever higher. Inflation in this section of retail is at historic levels, parabolic even. Perhaps investors are trying to get ahead of an imminent cooling in the price of used cars. The stock may not establish a lasting bottom until the market absorbs these 17.6M insider shares. These shares may be sold at any time, so they create a large overhang on SFT.
Even shorts hold fewer shares than the planned sale.ĭuring the Q3 earnings conference call, Shift management provided a reminder of the upcoming lockup expiration. This sale represents 29% of SFT's float and 22% of outstanding shares. Yet, on November 23rd, Shift Technologies insiders proceeded with a pre-planned expiration of a share lock-up and filed to sell a whopping 17,622,520 shares. People who believe in their company typically do not sell large amounts of shares into the teeth of a string of all-time lows. Ironically, the biggest problem for SFT appears to be a large overhang from a massive offering of shares from insiders. SFT failed to make much incremental progress from there and subsequent earnings reports generated little to no enthusiasm. This question is particularly stark given insiders purchased a significant amount of shares a year ago. The break below $10 ushered in an extended period of poor performance despite strong results and previous insider share purchases. Shift Technologies enjoyed a brief moment of fanfare after the SPAC. So what happened to Shift Technologies to create such a collapse? Sellers have dominated the trading in SFT all but one day since then. The stock initially responded in kind with a 7.5% gap up open but ended the day with a 7.1% loss. Ananda Husnul Khotimah/iStock via Getty ImagesĮcommerce used car seller Shift Technologies ( NASDAQ: SFT) delivered such a strong third quarter earnings report that analysts throughout the conference call congratulated management on the results.