Shift (NASDAQ: SFT), the online used-car retailer, began trading publicly on the Nasdaq this morning. The company went public via a reverse merger with Insurance Acquisition Corp., a blank-check company. Shares opened at $11.90 this morning and had dipped to $11.55 by mid-day.

The deal will raise about $340 million for Shift, the company said in a release

Insurance Acquisition is a special-purpose acquisition company, or SPAC — an already-listed shell company created as a vehicle to bring acquired properties onto the exchange. SPACs have been all the rage lately, as they provide a quicker, easier route to public exchanges than a traditional IPO. A notable example surfaced last month, as former Facebook executive Chamath Palihapitiya announced one of his SPACs would take IBuyer OpenDoor public.

The deal will make Shift the third publicly traded pure-play, online used-car retailer in the U.S. Founded in 2013, the firm hadn’t expected to go public so soon, but the pandemic, and the surprising resilience of online dealers, accelerated plans. Carvana began recovering before May and Vroom staged an IPO that succeeded beyond its own targets.

“I think what we’ve seen in the public markets is a massive shift between winners and losers,” Shift co-CEO George Arison told Automotive News. “And e-commerce companies are the big winners here.” 

Shift, which anticipated the deal would give it an enterprise value of $415 million, would be the smallest of the three online dealers. This week, Carvana had a market cap of $37 billion with Vroom’s at $6 billion.

Shift differs from its peers in a couple ways. First, while it sells cars nationwide, its reconditioning and warehousing facilities are concentrated on the West Coast cities of LA, San Diego, San Francisco, Sacramento and Portland.

Carvana and Vroom both have broader distribution networks, but neither is as well established on the Pacific Coast as Shift. 

The other differentiator is inventory focus. While Carvana and Vroom focus on relatively newer stock, Shift specialized in less expensive vehicles between 3 and 10 years old.

Like all car dealers, Shift had a bruising second quarter, with sales down dramatically in March and April due to the pandemic. But Shift says its quick recovery has mirrored that of other online dealers.

The company sold 2,296 vehicles in Q2, generating revenue of $32.4 million, down from 2,761 units and revenue of $42.5 million in Q2 2019, according to its Q2 earnings release.

However, weekly sales volumes returned to pre-pandemic levels five weeks after shelter-in-place orders took effect across the country, the company stated. Since late May, Shift has been rebuilding inventory and it predicted August sales would be twice as good as in April. 

The company projects a net loss this year of $55 million and a loss in 2021 of $65 million. 

In an interview with Yahoo Finance, Shift co-CEO Toby Russell said he expected losses to decline as a percentage of revenue. However, he said the company needs to invest big in advertising. 

“One of the big things we’re focusing on in the next couple of years is building our brand, and that means increased advertising dollars, making sure that folks know about Shift,” Russell said.

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