"We are strongly convinced that the merger will put us in a position to pursue a profitable future," Shift Technologies CEO George Arison said in the statement, which was released ahead of Shift's second-quarter earnings release.
Arison will step down as Shift's CEO effective Sept. 1, the company also announced Tuesday.
Jeff Clementz, the current president of Shift, will step into the CEO role. Arison, who founded Shift in 2013, will stay on as chairman of the merged company's board of directors.
Shift Technologies' shares were up 15 percent to $1.47 in Tuesday after-hours trading.
Shift said Tuesday it is also implementing an updated business plan, which includes a workforce reduction.
In a quarterly filing, the company said it will eliminate about 650 positions — 60 percent of its workforce — through the third and fourth quarters.
In the last several months, it became apparent that Shift’s current business plan — which estimated profitability by 2025 — would be “extremely difficult to finance in the current market environment,” Arison told investors and analysts during the company's earnings call on Tuesday.
“We needed to come up with an alternative plan that accelerates profitability, with significant lower volume and lower cash burn,” Arison said.
Later Tuesday, after the merger announcement, Shift announced a wider loss for the second quarter as it grappled with economic headwinds in the used-vehicle market, including rising interest rates and elevated gas prices.
Shift recorded a net loss of $52.2 million, larger than its loss of $31.7 million in the year-earlier period. Its total revenue rose 44 percent to $223.7 million in the quarter.
Shift’s volume of cars sold online rose 17 percent to 6,872 vehicles. But profitability for those cars sold online fell 38 percent year-over-year to $1,729.
The company once again noted “substantial doubt” about its ability to continue as a going concern. Shift’s ability to keep operating depends on its ability “to obtain additional equity or debt financing or generate profitable operations,” Shift said in its regulatory filings.
Shift hopes its updated business plan will put it in a position to “reach positive unit economics” in 2023 and achieve “company-wide profitability” in 2024.
Q2 total revenue: $223.7 million, up 44 percent from a year earlier.
Q2 net loss: $52.2 million, wider than its loss of $31.7 million a year earlier.
Q2 retail vehicles sold: 6,872, up 17 percent.
Q2 total gross profit per vehicle: $1,729, down 38 percent.