Online used-vehicle retailer Shift has completed its reverse merger with Insurance Acquisition Corp. and will begin trading under the “SFT” symbol on the Nasdaq exchange Wednesday. The transaction will raise about $300 million for Shift, the company said in a release.
Insurance Acquisition is a publicly traded special-purpose acquisition company, or SPAC. SPACs operate as a vehicle for companies to go public in what’s seen as a more efficient manner than a traditional initial public offering.
Insurance Acquisition’s shares, currently traded under the “INSU” symbol, will become SFT shares on Wednesday. INSU shares were trading up 2.5 percent to $11.60 on Tuesday afternoon.
Shift announced its planned reverse merger in June. Though there had been chatter about becoming a public company for a few years, Shift, founded in 2014, had still not necessarily expected to do so quite so soon.
That changed with the coronavirus pandemic, Shift co-CEO George Arison told Automotive News, as it has created unprecedented demand for e-commerce. “I think what we’ve seen in the public markets is a massive shift between winners and losers,” he said. “And e-commerce companies are the big winners here.”
Shift’s online used-vehicle selling peers, Carvana and Vroom, have seen their stocks perform relatively well as of late. Carvana’s shares have more than doubled since trading at about $91 at the beginning of 2020, rising to $215.96 on Tuesday morning.
Vroom went public in June at $22 per share. On Tuesday morning, its stock was trading at $47.33.
Shift’s vehicles are for sale nationally, but its associated services — such as test drives at the push of a button — are currently concentrated in West Coast markets. The San Francisco-based company plans to launch in about two markets per year to hit financial targets, but it could speed up the rollout, Arison said.
Meanwhile, Lithia, which committed $54 million in 2018 as part off a strategic partnership with Shift, will have a 16.4 percent stake in the post-merger company, according to documents filed with the U.S. Securities and Exchange Commission.