(Reuters) - Shares of Shift Technologies Inc fell 6.7% in their Nasdaq debut on Thursday after the online used-car seller went public through a reverse-merger deal with blank check firm Insurance Acquisition Corp.
Shift shares were trading at $10.86 in morning trade, compared with Insurance Acquisition’s Wednesday close of $11.66.
Shift is among a new breed of auto retailers that have tapped online channels to close deals without a handshake and are arranging for vehicles to be picked up or delivered without requiring customers to visit stores..
“We were actually on track for great growth this year before COVID came, but then the (pandemic) unexpectedly really turbocharged what we were doing,” co-Chief Executive Officer Toby Russell said in an interview.
In June, Shift agreed to go public in a reverse-merger deal with Insurance Acquisition, a special purpose acquisition company, at a valuation of $730 million. The deal closed earlier this week.
Shift raised over $300 million from the deal, which it intends to use to accelerate its growth as it competes with rivals Carvana Co and Vroom Inc. The company counts Goldman Sachs among its investors.
A SPAC, or blank check firm, is a shell company that uses proceeds from an IPO to acquire a private company, which then becomes public as a result.
Merging with a SPAC has emerged as a popular route for companies looking to go public, as opposed to a traditional initial public offering, as it involves less regulatory scrutiny and more certainty over the market valuation and funds raised.
A number of high-profile deals have been struck this year, including those of sports betting platform DraftKings Inc and electric commercial truck maker Nikola Corp, both of which went public by merging with a SPAC.
Reporting by C Nivedita in Bengaluru; Editing by Anil D’Silva
Our Standards: The Thomson Reuters Trust Principles.