Shift Technologies’ Stock Price Soared 120%+ Despite Bankruptcy

The Shift Technologies, Inc. (NASDAQ: SFT) stock price soared 120%+ after the company filed for Chapter 11 bankruptcy protection in the United States and ceased operations at its two locations and website. The company’s demise joins the SPAC mergers that have fallen on hard times this year.

The online used car startup started restructuring its business by reducing its employee headcount by about 34% in July this year, but this was not enough to salvage its business. The company attributed its bankruptcy filing to its deteriorating cash position and inability to attract more funding.

The company terminated about 144 of its employees, accounting for 80% of its workforce; shortly after filing for bankruptcy, it remained with 24 employees tasked with winding down the business. The wind-down process will cost the company between $4.1 and $5 million. 

Founded in 2014, during a transformative period in the automotive industry, Shift emerged as a pioneering force among a wave of online used car startups. This era saw several companies, including Carvana, Shift, Vroom, and Beepi (which later merged with Fair after shuttering in 2016), striving to disrupt the traditional dealership model.

The innovative ideas and services offered by these startups attracted significant attention, resulting in substantial fundraising efforts and heightened valuations. Some, such as Carvana and Vroom, even embarked on the journey toward initial public offerings (IPOs), signifying their growth and appeal to investors.

However, the game changed in the summer of 2020 with the arrival of the Special Purpose Acquisition Company (SPAC) boom. Shift recognised this as a golden opportunity to gain access to additional capital and decided to seize it. 

Shift Technologies CEO Ayman Moussa said: “We deeply value our employees, customers, partners and the communities in which we have operated. This was not the outcome we had expected or hoped to achieve. This decision follows months of trying to raise capital and restructure the balance sheet to allow the company to operate unencumbered in this challenging environment. Ultimately, the extensive efforts of our senior leadership team and advisors were not successful. We want to thank all our dedicated employees, customers and vendors who have supported us over the years.”

Shift Technologies stock price. 

Shift Technologies (SFT) stock price soared 120.52% to trade at $0.2370, from Tuesday’s closing price of $0.1077.