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Shift Technologies, the San Francisco-based online used car startup-turned-publicly traded company, filed this week for Chapter 11 bankruptcy.

The short story, according to recent filings, is that the company’s deteriorating cash position and inability to obtain further financing drove the company to file for bankruptcy and begin the process of closing down the business and liquidating assets. About 144, or 80% of the company’s employees, were terminated last week and 24 are remaining on to wind down operations. Shift has estimated that process will cost between $4.1 and $5 million, according to SEC filings.

Of course, there are a few twists and turns that may have accelerated Shift’s demise.

The company announced Friday it would file for bankruptcy and said it was shutting down its two physical locations in California. Shift filed Monday its petition with the U.S. Bankruptcy Court for the Northern District of California.

How did Shift get here? Let’s turn to the bankruptcy filings.

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Shift was founded in 2014, an era when a number of online used car startups launched in a bid to disrupt the traditional dealership model. Carvana, Shift, Vroom and Beepi, which shut down in 2016 and merged with Fair, were among the buzziest. Money was raised, valuations popped and some, including Carvana and Vroom, took the road to IPO.

When the SPAC boom arrived in summer 2020, Shift jumped at the chance to access more capital. George Arison, a co-founder and co-CEO of Shift at the time, even wrote a column in TechCrunch outlining how to navigate SPACs, a process in which a privately held company merges via a publicly traded blank check company.

The COVID-19 pandemic also arrived and turned used car sales into one of the hottest markets. The timing, it seemed, couldn’t have been better.

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The past year, however, has delivered inflationary concerns, a slightly cooling used car market, higher interest rates, tighter capital markets and overall economic uncertainty. Even with these factors beginning to percolate, Shift was still investing “significantly” in its technology platforms and turning to mergers and other investments in an effort to drive growth through volume and presence, the company’s first day motion petition notes.

In spring 2022, Shift acquired competitor Fair’s dealer listing marketplace. It then merged with consignment-to-retail used vehicle company. CarLotz by the end of 2022, pushing its employee count to about 590 people. Shift said the Fair acquisition was intended to help the company “build a digital marketplace where both dealers and independent sellers could list their cars alongside Shift’s owned inventory,” according to one bankruptcy filing.

Meanwhile, the Carlotz merger was designed to leverage its presence and dealer marketplace platform on the East Coast through a new omnichannel experience. But by February 2023, just two months after the merger has closed, Shift had decided to exit CarLotz’s presence on the East Coast and shut down the Downer Grove, Illinois location in order to focus on core West Coast markets. One remaining CarLotz facility in Pomona, California remained open alongside Shift’s locations in Los Angeles, San Francisco Bay Area and Portland.

The cracks were clearly visible by the end of Q1 2023. Shift laid off 30% of staff and reported it had generated $65.6 million in revenue in the fourth quarter, a 67% drop from the same year-ago period. Shift also reported operating loss of $60.7 million in the fourth quarter, a 14% increase from the same period in 2021.

Shift may have been cutting costs through layoffs, but it was still spending its cash on developing its technology, a growth-over-profits strategy that Wall Street was rejecting.

Shift tried to shift gears altogether in June 2023. The company brought on new management and ditched its ecommerce development, instead pivoting to a dealership model focused on profitable growth.

Shift contends the move was too little, too late. Shift still would need more capital to institute these changes in a bid towards profitability. Despite “months negotiating with the holders of the company’s convertible notes and
senior unsecured notes,” it was unable to reach an agreement to restructure the outstanding debt and gain additional financing.

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