Shift Technologies, Inc.’s (NASDAQ:SFT) latest 16% decline adds to one-year losses, institutional investors may consider drastic measures

Important Findings

  • The institutions’ sizable holdings in Shift Technologies imply that they have a significant impact on the company’s share price
  • The top 5 shareholders own 52% of the company
  • Analyst forecasts along with ownership data serve to provide a strong idea of ​​a company’s prospects

A look at Shift Technologies, Inc. (NASDAQ:SFT) shareholders can tell us which group is the strongest. With 17%, institutions own the maximum shares in the company. In other words, the group is exposed to maximum upside (or downside risk).

As a result, institutional investors suffered their heaviest losses last week after the market cap fell $119 million. The recent loss, which adds to a 90% one-year loss for shareholders, may not sit well with this group of investors. Institutions, often referred to as “market makers,” wield significant power in influencing the price momentum of any stock. Therefore, should Shift Technologies’ stock price continue to be weak, institutional investors may feel compelled to sell the stock, which may not be ideal for retail investors.

In the graphic below we enlarge the different ownership groups of Shift Technologies.

Check out our latest analysis for Shift Technologies

NasdaqCM: SFT Ownership Breakdown March 8, 2023

What Does Institutional Ownership Tell Us About Shift Technologies?

Many institutions measure their performance against an index that approximates the local market. As a result, they tend to pay more attention to companies that are included in major indices.

Shift Technologies already has institutions in the share register. In fact, they own a respectable stake in the company. This suggests some credibility among professional investors. But we can’t rely on that alone, as institutions sometimes make bad investments, just like everyone else. When multiple institutions own a stock, there is always a risk that they will find themselves in a “crowded trade”. When such a trade goes awry, multiple parties can compete to sell shares quickly. This risk is higher in a company without a growth history. You can see Shift Technologies historical earnings and earnings below, but remember there’s still more to be told.

NasdaqCM:SFT earnings and sales growth March 8, 2023

Shift Technologies is not owned by any hedge funds. Looking at our data, we see that the largest shareholder is Transportation Resource Partners, LP with 18% of the shares outstanding. Lithia Motors, Inc. and Jefferies Group LLC, Asset Management Arm are the second and third largest shareholders with 15% and 6.8% of the outstanding shares, respectively.

Our research also uncovered the fact that approximately 52% of the company is controlled by the top 5 shareholders, indicating that these owners exercise significant influence over the company.

Studying institutional ownership is a good way to gauge and filter a stock’s expected performance. The same can be done by studying analyst sentiment. There are a fair number of analysts covering the stock, so it might be helpful to get their overall view on the future.

Insider ownership of Shift Technologies

While the precise definition of an insider can be subjective, almost everyone considers a board member to be an insider. Management runs the business, but the CEO is accountable to the board even if he or she is a member.

In general, I think insider ownership is a good thing. In some cases, however, it becomes more difficult for other shareholders to hold the board accountable for decisions.

We can see insiders own shares of Shift Technologies, Inc. Insiders own $6.7 million worth of stock in the $300 million company on their own behalf. This shows at least some alignment. You can click here to see if these Insiders have bought or sold.

General Public Property

The general public, typically individual investors, own 11% of Shift Technologies. While this group may not necessarily be in charge, it certainly can have a real impact on how the company is run.

Private Equity Ownership

With a stake of 9.2%, private equity houses are able to help shape the corporate strategy with a focus on value creation. Some might like that because sometimes private equity are activists who hold management accountable. But sometimes private equity sells out after the company goes public.

Private company property

Our data shows that private companies own 3.0% of the company’s shares. It might be worth looking into in more detail. If related parties, such as insiders, have interests in any of these private companies, this should be disclosed in the annual report. Private companies can also have a strategic interest in the company.

ownership of public companies

It appears to us that public companies own 7.5% of Shift Technologies. This may be a strategic interest and the two companies may have related business interests. They may have broken up. This possession is probably worth further investigation.

Next Steps:

It’s always worth thinking about the different groups that own shares in a company. But to better understand Shift Technologies, we need to consider many other factors. For example, consider the ever-present specter of investment risk. We have identified 5 warning signs with shift technologies (at least 4 that we are uncomfortable with) and understanding them should be part of your investment process.

If you’re like me, you might want to think about whether this company is going to grow or shrink. Luckily, you can check out this free report that includes analyst forecasts for the future.

Note: The figures in this article are calculated using data for the last twelve months, relating to the 12-month period ending on the last date of the month to which the financial statements are dated. This may not tally with the annual report figures for the full year.

The assessment is complex, but we help to simplify it.

Find out if Shift Technologies might be over or undervalued by reviewing our comprehensive analysis which includes the following Fair Value Estimates, Risks and Warnings, Dividends, Insider Trading and Financial Health.

Check out the free analysis

This Simply Wall St article is of a general nature. We provide comments based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your goals or financial situation. Our goal is to offer you long-term focused analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.


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