{"id":55279,"date":"2020-11-26T23:26:39","date_gmt":"2020-11-27T07:26:39","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=55279"},"modified":"2020-11-26T23:26:41","modified_gmt":"2020-11-27T07:26:41","slug":"shift-technologies-insider-buying-drives-stock-off-all-time-lows","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2020\/11\/26\/shift-technologies-insider-buying-drives-stock-off-all-time-lows\/","title":{"rendered":"Shift Technologies: Insider Buying Drives Stock Off All-Time Lows"},"content":{"rendered":"\n

The Trade<\/strong><\/h2>\n\n\n\n

After a relative experienced a positive process in buying a used car from Shift Technologies (SFT) several years ago, I kept an eye out for the opportunity to invest in the company. That opportunity came this year with an acquisition by Insurance Acquisition Corp in the form of a SPAC (Special Purpose Acquisition Company<\/a>). I bought some stock shortly after the SPAC and right before SFT broke down below important support in October . I accumulated more shares ahead of the small run-up into earnings. The stock market crushed SFT in the wake of those earnings. However, I am a bit relieved as insider buying drives the stock off fresh all-time lows. <\/p>\n\n\n\n

\"Shift<\/a>
Shift Technologies (SFT) soared another 22.8% in the wake of news of insider buying. Source: TradingView.com<\/a><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n

Insider Buy<\/strong>ing<\/h2>\n\n\n\n

On Tuesday, November 24th, the company issued a very encouraging press release<\/a> to announce insider buying: <\/p>\n\n\n\n

“Shift….announced both completed and intended purchases of SFT Class A common stock on the open market by certain executives and board members: Co-Founder and Co-CEO George Arison; Chief Operating Officer Sean Foy; Chief Revenue Officer Mark McCollum; and Board Member and Audit Committee Chair Victoria McInnis.”<\/p><\/blockquote>\n\n\n\n

While the company did not announce the amount of the insider buys (no SEC filing exists at the time of writing), the breadth of participation delivers a strong buying signal. Indeed, Shift Technologies went on to declare…<\/p>\n\n\n\n

“Our decision to purchase shares on the open market reflects our continued confidence and excitement about Shift\u2019s opportunity in the $840 billion used car market…”<\/p><\/blockquote>\n\n\n\n

The stock is now a clear buy-on-the-dips. Insider buying drives stock momentum. As a result, I plan to accumulate more shares, more aggressively.<\/p>\n\n\n\n

The Opportunity<\/strong><\/h2>\n\n\n\n

A Seeking Alpha article published a month ago titled “Pick Shift Over Carvana And Vroom<\/a>” gives a good primer on the company’s background, operations, and the investing thesis. The valuation comparison really caught my attention: “Despite estimates for over 100% growth over the next few years, Shift is valued at a measly 1.3x 2021E revenues, or around $500mil.” Competitors Carvana (CVNA) and Vroom (VRM) sold at 4.6 and 2.4 multiples at the time. Yahoo Finance<\/a> now reports SFT at an enterprise value of $877.4M which boosts the presumed multiple to 2.2.<\/p>\n\n\n\n

Earnings<\/strong><\/h2>\n\n\n\n

The first earnings report<\/a> as a publicly-traded company is even more interesting. I did not read or hear anything that tells me to throw the stock overboard like the stock market did. Here are some key highlights for the second quarter:<\/p>\n\n\n\n