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Shift set to trade on NASDAQ under ticker 'SFT'

Shift.com, the online car buying website will begin trading tomorrow on the NASDAQ under the ticker symbol 'SFT.' Shift Co-CEO Toby Russell joins Yahoo Finance’s The First Trade with Alexis Christoforous and Brian Sozzi to discuss.

Video Transcript

BRIAN SOZZI: Shift.com, the online car buying website, is looking to put its bottom line into overdrive. It will begin trading tomorrow on the NASDAQ, and you'll be able to search for the company on Yahoo Finance under the ticker symbol SFT. Let's bring in Shift Co-CEO Toby Russell for more. Toby, good to see you. Congrats on this listening tomorrow. Listen, we've talked to the folks at Vroom before. We've talked of Carvana. They've built some pretty formidable businesses. How are you going to compete successfully with them?

TOBY RUSSELL: So first, I would say in many ways, we think of those folks as peers. This is an $840 billion market, a lot of people need to buy cars, particularly in a world of COVID where folks are afraid of physical retail. They want to go online and get the vehicle, but less than 1% of all auto sales are e-commerce and online. The three of us represent less than 1%, so we [INAUDIBLE] see tremendous growth opportunity here as the auto retail world goes basically as every other retail category has gone, and that is from like zero to 30% pretty quickly.

ALEXIS CHRISTOFOROUS: Do you also see, Toby, that you're benefiting from a change in consumer behavior? A lot of these car sharing companies like Uber and Lyft had to pivot change their business models. They've seen business fall dramatically. Are you benefiting from that?

TOBY RUSSELL: Well, I hate to think of the idea of us thinking about as benefitting, but we are definitely seeing increased demand for personal vehicles. Why? Public transit is being viewed as unsafe in many ways and shut down in a lot of locations. Second, folks still need to get around, get to the grocery store, God forbid, get to the hospital, want a personal vehicle that's safe for that. Ride share, much like public transit, is being viewed as an area where you could see exchange of virus, and so what we're seeing is a lot of people saying, hey, I would like to get around town in my own vehicle. Finally, folks are not wanting to get on a plane and fly long distances. Instead, they're taking family vacations locally, driving instead of flying. And so the result of that, Alexis, is that we're seeing a lot of interest and a big demand for personal vehicles.

ALEXIS CHRISTOFOROUS: I know that you deal with used cards, and you know, California's governor recently mandated that he wants all new cars in the state to be electric by 2035. We've talked to analysts on this show who say that it's going to be explosive for the used car market. We're going to see prices, you know, move higher in that space. What are your thoughts on that?

TOBY RUSSELL: I think that's right. First, we've seen a growing demand among used cars of electric and hybrid vehicles in general over the past year. So there is a shifting consumer demand even within the used car market. Second, yes, if California were to mandate that you can't sell a new internal combustion engine, I think you're going to see tremendous demand for those vehicles continue, and so you'd see two things-- a premium on used vehicles within the state as well as increasing importing. You'd see vehicles moving cross border, which sets up companies like Shift very well, because we're not a local operation, we let people shop across many geographies. Today, folks in California are buying from Shift hubs, as we call them, up and down the whole of the West Coast. And over time, that'll be expanding nationwide. So the ability for California shoppers to be able to shop cars from lots of locations occurs on Shift.com.

BRIAN SOZZI: Toby, I do want to touch upon some of the numbers. So this year, you're estimating about $55 million net loss. Next year, that will arise to about 65 million. What happens in 2022? Is it an accelerating loss, or do you guys hit profits?

TOBY RUSSELL: So we won't be accelerating loss. We're going to be demonstrating operating leverage over time. So as our revenue grows, we're going to see those losses decline as a percent of revenue. 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. The history of Shift really has been one of everybody who uses it says, oh my gosh, that's amazing. I wish I'd known about that sooner, and we've really under invested in many ways in advertising, particularly advertising outside of digital. So we're working on getting into channels that go beyond just the online digital advertising and help people get to know Shift in the next couple of years.

BRIAN SOZZI: Lithium Motors is an investor in your company. Do they plan to stay an investor after the debut, and any talks with them on working closer together? Obviously, they have the dealerships, and you have the online platform.

TOBY RUSSELL: So I think everybody sees the future, and that is going to be an online world. Shift was, I think, a great learning platform for Lithium on that. We do expect them to remain an investor certainly within the coming months and year. And so what we see though is the entire industry moving very quickly to the online world. That used to be a conversation about, hey, yes, at some point over the next like five years, you'll need to be able to be a online retailer of automobiles. With the COVID pandemic, that became a like right now. We saw, for example, in California, CarMax stores outright shut down for inability to be able to sell online. That's unheard of, and so everybody is saying, wow, I don't need a five year online strategy, I need it right now online strategy.

BRIAN SOZZI: All right, Shift Co-CEO Toby Russell, again, congratulations, and look forward to following your path.

TOBY RUSSELL: Thanks so much, Brian and Alexis.