In the first quarter of 2019, online used vehicle retailer Shift Technologies cut its workforce by 30% as the company sought to reduce costs and eliminate duplicate positions following its merger with CarLotz. The drastic reduction in staffing was a clear indication that Shift was still struggling to integrate the two corporations and get on track from a operations standpoint. In addition to layoffs, Shift also made several strategic changes, such as closing down its physical showroom locations in favor of selling vehicles exclusively online. Despite these challenges, Clementz maintained that Shift Technologies is committed to becoming a leading player in the used car market.
CEO Mayer’s decision to lay off thousands of employees came as shock to some and as a sign of desperation by others. The company’s revenue plunged in the fourth quarter, putting more pressure on Mayer to make tough decisions. Experiencing severe operating losses, the layoffs are likely a sign of even more trouble ahead for Yahoo.
Shift eliminated duplicate costs and roles following its merger with CarLotz in December, before shuttering the Downer Grove, Illinois location in February due to its focus on core markets on the West Coast. The company continues to operate three locations in Los Angeles, San Francisco Bay Area, and Portland.
The decline in headcount that Microsoft announced during its latest earnings call can likely be attributed to the company’s decision to move to a decentralized sales organization earlier this year. This shift resulted in the elimination of a number of corporate roles, and it is now hoped that the reduced overhead will allow Microsoft to focus more on developing its core products.
The struggling Shift Technologies, which went public in 2020 via a merger with special purpose acquisition company, reported dismal fourth quarter financial results. Revenue was down 67% from the same year-ago period, and operating losses increased 14%. One possible reason for these falling sales and expenses may be the slow-growing tech market.
The company’s net income in the fourth quarter was largely due to its acquisition of CarLotz, which contributed a one-time gain of $76.7 million. In dollar terms, this was the second-largest purchase Shift has made in its history, trailing only its recent $1 billion acquisition of music streaming company Pandora. That said, gross profit per vehicle decreased 42% between 2021 and 2022 and is likely indicative of higher competition in the automotive market as well as costly development costs associated with new services such as self-driving cars.
On Wednesday, the company released its first-quarter earnings report which showed a decrease in revenue and profits. This caused shares of Shift to fall nearly 28% on the stock market. However, despite the negative news, Shift regained its Nasdaq exchange listing requirement by hovering above $1 for a majority of Wednesday’s trading.
