Gupta advised that visibility on this turn is limited, likely not coming until the latter half of 2023 at the earliest. “While the updated business plans are aimed at allowing both companies to get to FCF breakeven before running out of liquidity, we do not see this as a reason to own the shares until unit economics can be proven along with scalability.” “Moving to SFT, we see the updated core business plan along with acquisition with CarLotz, which we view as a de-facto equity raise with some synergies, providing additional liquidity runway though likely to come at a substantial expense to growth and little visibility on return to scaling the business,” he wrote. In regards to the Shift Technologies ( SFT) acquisition of CarLotz ( LOTZ), Gupta was not very optimistic in the near term. Both companies are now ex-growth, burning ~35-40% of in cash flow and trading at ~4x 2023E EV/GP, a premium to many FCF generating and higher growth e-comm peers.”Īs such, Gupta indicated there is no other course of action other than to downgrade both names to an “Underweight” rating. “There is clearly no easy/quick fix or turnaround due to which we struggle with the investment case in the near to medium-term. Shift should have disclosed this after market alarm system was installed and/or it should have been removed before we purchased the car. “We continue to see a challenging backdrop for the used car industry and prefer companies that have ample liquidity and/or diversity in their business to navigate an uncertain macro backdrop,” Gupta wrote. The declines on Monday add to an over 90% decline in Vroom ( VRM ) shares over the past year while Shift Technologies ( SFT ) shares have fallen over 80% in that span. Vroom ( VRM) shares slid over 5% on significant premarket volume, while Shift Technologies ( SFT ) tumbled 2.4% on significantly lighter volume. Morgan analyst Rajat Gupta moved to a Sell-equivalent rating on both. ( NASDAQ: VRM) slid sharply on Monday after J.P. For instance, we've identified 2 warning signs for Shift Technologies that you should be aware of.Online auto retailers Shift Technologies ( NASDAQ: SFT) and Vroom, Inc. But to truly gain insight, we need to consider other information, too. I find it very interesting to look at share price over the long term as a proxy for business performance. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. The share price decline has continued throughout the most recent three months, down 17%, suggesting an absence of enthusiasm from investors. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Given that the market gained 27% in the last year, Shift Technologies shareholders might be miffed that they lost 42%. This free report showing analyst forecasts should help you form a view on Shift Technologies A Different Perspective Even so, future earnings will be far more important to whether current shareholders make money. We like that insiders have been buying shares in the last twelve months. NasdaqCM:SFT Earnings and Revenue Growth October 14th 2021 You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values). Our monkey brains haven't evolved to think exponentially, so humans do tend to underestimate companies that have exponential growth. Prima facie, revenue growth like that should be a good thing, so it's worth checking whether losses have stabilized. Davidson analyst Michael Baker to downgrade the stock on Wednesday.The online. Our sympathies to shareholders who are now underwater. After a noisy earnings day for Shift Technologies (NASDAQ:SFT) motivated D.A. Given the revenue growth, the share price drop of 42% seems quite harsh. That's a strong result which is better than most other loss making companies. In the last year Shift Technologies saw its revenue grow by 191%. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth. (a) Lock-Up Period shall mean the period beginning on the Closing Date and ending on the earlier of (i) the date that is 180 days after the Closing Date and (ii) (A) for 33 of the Lock-up Shares held by the Holders and their respective Permitted Transferees, the date on which the last reported sale price of Acquiror Common Stock equals or exceeds 12.50 per share (as adjusted for stock. Shareholders of unprofitable companies usually expect strong revenue growth. Given that Shift Technologies didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development.
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