In my hunt to find a way to play the used car market opportunity, I have finally zeroed in on Shift Technologies ( NASDAQ: SFT ).īefore we get into the detailed investment thesis, I would like to share a comparative analysis of Shift vs. Even at current prices, I don't like their valuations. Since then, Carvana has outperformed the S&P 500 by ~2%, and Vroom has underperformed S&P 500 by ~40%. However, after carrying out thorough due diligence, we concluded that both Carvana and Vroom were richly priced at $210 per share and $49 per share, respectively. Carvana: A Compelling Narrative With One Major Issue We have previously presented detailed research on both - Carvana and Vroom, as can be found here:ġ. Sergio Di Pasquale Luci/iStock Editorial via Getty Images Investment ThesisĪn acceleration in the transformational shift in the massive yet highly fragmented used car retail market (from traditional auto-dealerships toward digitally-native tech companies like Carvana ( CVNA) and Vroom ( VRM)) has piqued our interest over the last few months. Active contributors also get free access to SA Premium. It's easy to become a Seeking Alpha contributor and earn money for your best investment ideas. Learn More »Įditor's note: Seeking Alpha is proud to welcome Ahan Vashi as a new contributor. Looking for more investing ideas like this one? Get them exclusively at Beating the Market.According to my estimates, Shift's stock is severely undervalued and long-term investors could expect to generate ~35% CAGR returns over the next decade.Furthermore, I provide my fair value and expected return estimates for Shift based on very conservative assumptions. In this note, I will share a detailed qualitative and quantitative analysis of Shift's business.End-to-end e-commerce platforms such as Shift, Carvana, and Vroom are revolutionizing the used car industry through the use of advanced AI/ML technology.However, this market is still highly fragmented and e-commerce penetration remains below 2%. In the United States alone, the used car industry is estimated to be worth $840B per year.Shift is one of the most compelling ways to play the transformational change in consumer buying and selling patterns in the used car market.
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