Description

Hold your nose.  CarLotz (“LOTZ”), an omni-channel used car consignment company that is a 2021 vintage busted-SPAC, is interesting on the long side.  This is in part because that view is likely a lonely one. Why? Due to internal execution issues, it greeted the public market by missing its first guidance for unit profitability targets in Q4 2020 and then, cognizant of the issues, issued 1Q and full year 2021 guidance and then proceeded to miss on 1Q unit profitability shortly thereafter.  Next, mid-second quarter it had to lower full year guidance due to industry issues. Investors were not happy.   Its stock’s all-time high price remains the day it de-SPACed (January 21, 2021) and it has gone lower from there, even before the execution issues.  The stock is now off well over 50% making it the worst performing post-SPAC of this year and there is no near term catalyst.  It even made a VIC cameo in Zipper’s early February TDAC write up where it was held up as an example of de-SPACing issues and specifically as a “worst SFT.” LOTZ has never been profitable and it could be dead money for a little while. Even the stonky redditers have rejected it.   Interested in going long yet?

LOTZ’s capital-lighter used-car consignment-based business model, founded in 2011, is ultimately attractive with a long runway of growth.  This is not immediately obvious at this moment (insert your own graphic defecatory metaphor on what they did to their bed thus far in 2021).  The SPAC capital will help right the ship.  For an investor that can look beyond the very recent past and the next few quarters, the company is deploying its significant cash balance to rapidly expand its hubs/branches.    Applying reasonable unit economics to a seasoned branch network with a KMX-like multiple for a much higher ROIC business suggests the stock could triple from here in a few years.  After punishing its shareholders right out of the gate LOTZ stock has no natural buyers today so it could be an interesting time to get involved.  Trading at 1.7x TTM TEV/sales which does not reflect its high return on capital growth potential, its current market cap is approximately $540m and after deducting net cash from the SPAC transaction in TEV is approximately $250 million.  Its volume has been trending lower and is around $10m/day very recently but was far more than that on a shares basis for most of this year (and a higher dollar volume with a higher price clearly).    

Business Description

Joining other internet-enabled used car companies that have been discussed here (CVNA and VRM) as well as another recent disappointing de-SPAC Shift Technologies (SFT), LOTZ’s competitive advantage as the only consignment-based model is that it normally offers the opportunity for sellers to earn approximately $1,000 more than a wholesale alternative (i.e. auctions) while buyers also benefit with lower prices.  I say normally because that wasn’t true in the first half of 2021.  Usually there is a gap between wholesale and retail prices but as you may have observed prices went parabolic and that gap temporarily narrowed (retail prices lag a little) to the point where consignment was not as attractive to sellers. I will explain this in more detail below.

It is headquartered in Richmond, VA where coincidentally KMX is also HQ’d. Obviously more general info can be found in the 10-K and via investor relations on the website.  That said, here are a few links to older relevant information:

Early SPAC presentation (November 2020):  https://www.sec.gov/Archives/edgar/data/1759008/000110465920126107/tm2036217d1_ex99-1.htm

Final SPAC presentation (Jan 2021): https://www.sec.gov/Archives/edgar/data/0001759008/000110465921002730/tm212722d1_425.htm

SPAC prospectus:    https://www.sec.gov/Archives/edgar/data/0001759008/000110465920140425/tm2034230-13_424b3.htm

SPAC prospectus supplement w/5-year projections for revenue, EBITDA, FCF and 2023E ROIC:  https://www.sec.gov/Archives/edgar/data/0001759008/000110465921003224/tm212811d2_8k.htm

What’s the theoretical advantage of consignment? The seller (often a fleet management company but other LOTZ suppliers include large companies such as banks and rental car companies but also consumers) has a fiduciary duty to maximize proceeds for its clients (i.e. current customer ARI Auto Direct must sell a vehicle for the best possible price or else its own client, let’s say a large pharma company, may take its business elsewhere.)  Under normal market conditions, ARI can maximize its realized price by selling through LOTZ at retail vs. its alternative to sell through auction for a lower market clearing wholesale price.  LOTZ refers to this dynamic is allowing access to the retail channel.  If ARI sells directly to a dealer and bypasses the auction, ARI's client might be left wondering whether it got the best price.  And flipping the concept on its head, if ARI could obtain a better wholesale price from a dealer than at auction, why would that dealer have agreed to buy from ARI through that channel (since they could always get it cheaper at auction)?  The wholesale market is the efficient way to sell vehicles but it results in a wholesale price.  The retail market offers a better price and LOTZ is the only service provider who enables its suppliers to have direct access. 

The company has had issues with high supplier concentration (top 2 were 40% in 2020 and a single company was 60% in Q1 21) but that should improve as it scales nationally. 7 of the top 10 fleet managers are current suppliers which should help keep acquisition costs low on that side (vs. buyers).  Note also that there are always some cars that do not sell at retail and LOTZ de-lists those and sells them at auction at a loss.  They have averaged between 7 and 15% of vehicles sold historically.     

The company came public with 8 hubs (approximately the same store number as KMX in CY 1996) and has since opened 3 more and announced 8 more thus far in 2021. It expects to open 14-16 hubs this year.  All but its first two original hubs have reconditioning facilities and the newest hubs will be the largest.  An important wrinkle in the business model is that when a hub is first opened LOTZ ensures sufficient supply of vehicles by stocking it with owned inventory.  Thus some capital is required for growth.  In Q4 20 and Q1 21, LOTZ carried $11m and $9m, respectively of inventory.  Historically within six months the mix shifts to 70-80% non-competitively sourced (i.e. consigned) vehicles.  Also historically its hubs turned EBITDA profitable after around two years so (in Captain Obvious parlance) it needs enough of them to first absorb SG&A and then to start generating cash.  What LOTZ required was a large cash infusion to fund escape velocity growth which is exactly what the SPAC provided.  Interestingly the company said that two of its recent hub openings in Seattle and Orlando have been the fastest ramping and most successful hubs in company history.  In addition, the company will be spending SPAC capital on national advertising and technology upgrades.  

So what happened?  Since consummating the SPAC transaction, LOTZ has underperformed for two reasons, the first was company-related (4Q20 to 1Q21) and the second was industry related (1Q21 to Current 2Q21):

First, there was a self-inflicted inventory glut.  The company opportunistically added (note this is not outright purchasing) too much inventory in Q4 which proved to overwhelm its reconditioning capacity before it could expand with the SPAC capital.  The same issues plagued another recent de-SPAC called Shift Technologies (SFT) which generally buys vehicles to sell.  LOTZ also added inventory specifically from a supplier with which it had a profit (and loss) sharing agreement and a fixed time frame after which it would have to de-list the vehicles and sell them through wholesale at a loss.  Due to the delay in making vehicles available for sale, there wasn’t much time to sell them so they had to either mark them down or send them to an auction for a lower price.  It did a little of both in the first quarter and saw its gross profit fall 19% Q/Q while sales increased 53%.  A key metric is retail gross profit per unit which has averaged around $1,650 from 2017 to 2020 but came in at $1,182 for Q1 21.  The company also lost an estimated $2,800 per unit on approximately 400 vehicles that it sold through wholesale vs $400 to $700 on less vehicles/quarter in 2019 and 2020. 

The company will greatly benefit from increased reconditioning capacity that will come along with hub expansion, especially because it will also be expanding its geographic coverage from which there will be network benefits in working with large potential suppliers (when larger amounts of vehicles become available at attractive terms it will better be able to absorb them and some suppliers will allocate vehicles when they are found in multiple markets that reasonably overlap with the LOTZ footprint).  The company maintained its 2021 guidance which if I were to guess is indicative of some embedded cushion in the original forecast that the team awkwardly sidestepped on the conference call and probably therefore made the situation worse (because it looked like they wouldn’t give detail on the bridge, it looked like they couldn’t explain how they would meet full year guidance after a lower start to the year – I am willing to chalk this up to public market growing pains). I would also add that the market has focused on the GPU miss despite beats on absolute dollar revenue and gross profit; had LOTZ de-listed the aged vehicles instead of marking them down and selling them retail they would have flown through the wholesale GPU not the retail GPU The resulting absolute totals would not have been materially different but the retail GPU metric would have appeared more normal. (Maybe in retrospect they should have done that – also public market growing pains perhaps.)

Second, once the aforementioned glut had been worked through, the overall industry experienced an inventory shortage!  Led by the chip shortage for new cars and coupled with the pandemic-driven pent-up demand for vehicles, used car pricing inflated to headline-making levels.  This created very challenging conditions for a company who benefits when there is a spread between wholesale and retail margins (which compressed as pricing went parabolic). It is unlikely that these factors have permanently impaired the profitability of its consignment business model. To add insult to injury, during the second quarter, one if its largest suppliers at that moment (a newer account) paused working with them because they could effectively access retail prices on their own through the auction market given lagging retail price increases relative to wholesale as the slope of prices went vertical.  At this point the team lowered guidance although most importantly they did not change the number of hubs they planned to open in 2021.  Therefore, the longer-term earning power of the network would remain unchanged despite the issues in the first half of 2021 if one believes the issues are not structural.     

Unit Economics and Valuation:

Historically, retail GPU on vehicles sold has averaged ~$1,200 (the net of LOTZ is paid on the front end for the transaction).  It has been as high as $1,500.  LOTZ believes it will be able to raise prices as it improves the experience with technology etc. so let’s say $1,500 is the mature retail GPU.  Back-end add-on features that are offered via a third-party such as financing, warranties etc. have recently exceeded $600.  In March 2021 LOTZ announced an expanded relationship with Ally Financial and expects to offer more add-on’s and increase penetration.  Also, penetration improves with longer tenured staff who learn how best to present the options to customers (they are also trained).  Involuntary turnover has been very low according the CEO at the DB Auto conference in Mid-June (avail online at LOTZ IR and worth a listen).  Also higher ASPs affect financing fees and LOTZ is moving into higher ASP vehicles in addition to the benefit from higher prices recently.  So let’s say $700 is the mature finance and insurance retail GPU.   So base case retail GPU is $2,200 although LOTZ management clearly thinks it can do much better than that and guided to the sell side to more like $2,500.        

It is true that LOTZ is cheaper on forward valuation metrics than CVNA, VRM and even SFT though it may have the best economics.  Some VRM and SFT shareholders see that large cap CVNA has a valuation that would imply multi-baggers for their companies but clearly a premium is warranted.  3.5x 2023 sales and 50x 2023 EBITDA (or even VRM multiples at 0.8x 2023 sales) would be awesome but I am going to use lower multiples.   The company is trading at 0.9x EV to 2021 reduced guidance sales but its sales could double or more in 2022 after reflecting the large investments it can now make with its SPAC proceeds.  Extremely high growth should continue for several years.  SPAC transaction guidance was for EBITDA profitability next year but this may only be reached in 2023.    

I am going to focus on 2023 to estimate what LOTZ could be worth.  Given the recent execution, the discount rate is high and some appreciation from here could be captured simply if LOTZ meets guidance.  At 15 new hubs per year, LOTZ will have 53 hubs at year-end 2023.  I am assuming 2,200 cars sold per hub (based on historical mature sell through at existing hubs) at an ASP of $16,000 (total sales of $1.866B and vs. ASPs of $18-20k in last two quarters).  Retail GPU is $2,200 ($1,500 front end and $700 back end) while 10% of vehicles are sold at wholesale at a loss of $1,200 per vehicle (based on the average historical loss per vehicles 2017-2020). SG&A is $125m which is 6.7% of sales (seems reasonable as 2021 SG&A projected to be $100m.  SG&A- split into 3 x $33m buckets and not including stock comp) with $33m of tech platform investment that will be largely finished by 2023 but compensation expense of $3m will be higher and advertising/marketing will probably be similar to the approx. $33m million budgeted for this year include $23m for new openings). So applying run rate GPU to the 53 hubs (remember that they will take time to ramp up in reality but I want to look at earnings power so perhaps you could call it a forward multiple).  EBITDA would be $117.5 million.  At EBITDA multiples of 10-16x (the current KMX trailing multiple) get to prices of between ~$10.25 at ~$16.50 per share using fully diluted shares.  A 3 year horizon would be an annualized IRR of between ~25% and 50%.  For reference, using the same assumptions but an $1,800 retail GPU (what has been achieved historically) would yield prices between $6.25 and $10.00 per share in 3 years.  At $2,500 the high end exceeds $20.00.  Lower 2023 EBITDA would push out these values obviously.

A very rudimentary LBO analysis that includes additional growth through 2027 as a gut check suggests a 25% annualized IRR for 7 years from current levels to a takeout price of $24.25 per share (using fully diluted shares no treasury method and cash of zero at transaction).  I assumed that LOTZ was indeed able to reach its 2025 projections but it took them until 2027 to do so (for conservatism) and used dilutive securities proceeds of $117m to do so.  I also assumed that at that time a financial buyer could get 4x EBITDA senior debt at 6% and 2x mez debt at 10% and paid 11x 2027 EBITDA of $318 million.  In my simple model, I assumed revenue growth going from 25% in year 1 down by 5% every year to 10% then holding constant and assuming 25bps of EBITDA margin expansion from 10% to 11% in year 5.  All FCF was used to pay down senior debt.  Also I used a 25% tax rate and a change of NWC if 15% of the change in sales (similar to past years) and $25m of annual capex.  In that completely made up scenario a financial buyer paying 11x and exiting at 7.5x (ouch but what things used to trade for when I was a young lad) then they could get a 15% IRR (admittedly much lower than targeted returns when I was a young lad but that is what I solved for given the above constraints). Using more punitive assumptions still leaves a lot of room from current levels so long as there is some profitable growth.           

Where could this go in a downside scenario?  Aside from the fact that it settled at these levels after an absolutely awful debut in almost every way, it could always go lower since it’s not profitable.  There is a three year cash cushion which would suggest there should always be some option value prior to the business model clicking.  If the company spends to build out the hub network but receives no return on its marketing or technology investments then ultimately it could get very ugly.  For the moment the “net-net” value is $2.50 or 50% lower (that backs out the warrant and earnout liabilities since those are irrelevant in a downside scenario and also only includes primary shares and in-the-money options at that level).  If LOTZ achieves the mid-point of its lowered 2021 EBITDA guidance of negative $77 million (also excludes stock-comp since we are looking at cash) and spends the midpoint of its 2021 capex guidance of $47.5m then next year this value would be 70% lower than today.   This had better have multi-bagger/compounder potential with that potential fact pattern. 

Investment Positives

The vehicle shortage hasn’t permanently changed the industry and long term growth dynamics for LOTZ are intact.  In particular the recent rate of increase of used car prices is unsustainable: in May 50% of the CPI increase came from 6% of its constituents (this included used cars).  In fact the July 9 Manheim Used Vehicle Index dropped 1.3% in June month over month.  It had previously increased every month since December. Even if prices remain elevated, so long as the rate of change decreases then LOTZ will benefit.  Note also that used cars in the CPI still increased 10.5% m/m in June and were a third of the CPI gain (retail lags wholesale / gap increasing). Also used cars increased substantially more than new cars which at some point become unsustainable.     Below is a chart of the Manheim index going back to 1995.  If flat or falling prices are supportive of the LOTZ business model (because the retail-wholesale spread is not as narrow as during times of rapid price increases) then it looks like they picked the worst possible time to come to market as it shot up beyond any past trend…    [look at the graph and mentally play the wont-wah Debbie Downer muffled trumpet] 

Here is another chart to look at which breaks out CPI components in the last 5 years to get a sense how unusual this last period has been. Look at light green for used cars and also the relative size of the light green to the blue (new vehicles). 

As a minor adjunct, participants in the $10.50 SPAC PIPE included relevant strategics such as KAR Global (an auction company which already had a stake in CarLotz when it was private) and McLarty Diversified Holdings (former CEO of one of the largest auto dealership groups). These groups would seem to be in an excellent position to evaluate the reasonableness of the LOTZ business plan.  In addition, the SPAC sponsors bring a highly respected and successful pedigree from PE firm Advent International so, although they were highly incentivized to get any deal done, their decision to target LOTZ is not entirely irrelevant (according to the merger background they reviewed 300 companies and had detailed discussions with 8 including LOTZ).

Company’s capital efficiency:  By sidestepping the need to build huge inventory, the consignment model hypothetically offers better returns on capital.  This may not be immediately evident on the cash flow statement given brand building marketing spend and technology investments.  While smaller in magnitude, capital is tied up in purchased inventory for hub openings but as discussed above that is largely released within six months. Since used cars are a depreciating asset it is also best to keep them off the balance sheet.  For reference, LOTZ created a $119m revenue business prior to the SPAC transaction with only $35m in capital while SFT created a $196m business prior to its de-SPACing several months earlier with $303 million in capital.  CVNA’s pre-IPO revenue in 2016 was $365 million after raising $905 million.     Also for reference, the amended SPAC prospectus projected LOTZ 2023E ROIC (see the footnote for the definition as it is calculated with a shortcut using current book equity and adding capex) to be 18.8%.  Even if that is pushed out it is a useful comparator to KMX’s recent avg. ROIC of 1.5% to 3%.

The SPAC sponsors are incented at $12.50 and $15.00 per share: whether or not it is an indication of the difficulty of getting the deal done, the ACAM sponsors agreed to only receive half of their economics at closing.  The rest will come 25% after a period of time at $12.50 at 25% at $15.00.  They also participated in the $10.50 PIPE.    

Expanded team will help to manage growth and further development of tech platform.  I would also encourage anyone interested to watch the CEO present.  He was a Harris Williams banker after HBS for a few years then started CarLotz in 2011 – while there were some obvious issues out of the gate I think he has the right stuff to figure out how to succeed here.  He also owns ~10% of the company per the proxy.

There are no gain on sale issues to think about. Oh wait, there was a $16,000 gain on lease vehicles on the cash flow statement in 2018.  Is that cash??? Let’s discuss!!! (just kidding and kudos to thistle933, roark304 and maybeman among others in the CVNA discussion!) 

Investment Concerns

Requirement to reach cash profitability means stock is valued on softer option value vs. a more solid margin of safety.  The full spending program would not leave a huge amount of cash cushion if it does not have sufficient returns.  If in three years LOTZ spends $163m of investments as contemplated then relative to its current cash balance of $293m then it would have $130m to fund ongoing operating losses (some of that $163m is opex).  At some point cash becomes an issue and dilution could be meaningful as 2021 cash EBITDA is projected to be a burn of $77 million (remember some of the $163m is already in there).

Economic recession risk? Remember those? The consumer might not want to buy a car if they are worried about the economy (would it be spooky animal-ghosts instead of bullish animal-spirits?) A potential supplier may also elect to keep its vehicle a little longer rather than follow the traditional 3-5 year ownership cycle or replacing it with a new/newer one.  In 2008 KMX saw same store retail volumes decline 6% and wholesale volumes decline 13%.  Interestingly, it also saw retail prices fall less than wholesale prices which could be supportive for LOTZ in a larger macro demand downdraft (down 6% retail vs. down 10% wholesale).  KMX also slowed openings in August 2008 and paused them in December 2008. If there is a recession and LOTZ hasn’t reached escape velocity (profitability) and also decides to slow or stop openings, then suffice it to say that could be bad although like most companies it has other levers to extend its runway.   The 2001 recession when KMX was part of Circuit City (prior to the late 02 spin) looked much better as comparable store sales growth was actually 28% in 2001 (it opened no retail units from 1999 -2001).

As became clear recently, management has not run a public company before, although the CFO (appointed Nov 2020) was previously CFO of CitiTrends (a company that is no stranger to VIC) in the mid-aughts before working in private cos. For anyone from the Chicago area he was most recently CFO of Portillos (definitely worth a visit and I recommend the Italian beef with spicy peppers.) Many other members of the senior management team are also recent hires.  The team’s operational credibility has been strained by recent underperformance even if some of the reasons were outside of their control.  (See the Manheim pricing chart above).   

While wholesalers may quickly return to LOTZ as prices fall, there could also still be short-term profitability issues based on falling values of vehicles in LOTZ’s on-balance sheet inventory (mostly used to seed new hubs as discussed above). We will have to see if prices actually fall or if they stay at current levels like most NYC restaurants…

But not all the underperformance can be attributed to pricing.  There will of course continue to be execution risk as the company grows.  Both SFT and LOTZ found that their ability to recondition vehicles on a timely basis was challenged in the fourth quarter of last year.  This is less surprising for Shift which both has fewer processing centers and larger volume than LOTZ, but hopefully there have been useful execution learnings for LOTZ as scale continues to expand.  Also based on the LOTZ-specific issues in the fourth quarter of last year that bled into the current quarter, hopefully management will not find itself having to return vehicles to the seller after 90 days (perhaps related to the reconditioning backlog but also potentially due to other growing pains) or eat the loss by flushing them through the retail channel as they did in the first quarter of this year.  Apparently there is also a newer “sell-it-now” option that would be another way to non-competitively source vehicles; however it could add to the capital intensity and offers the opportunity to mess up.         

Logistics and some reconditioning outsourced: While most reconditioning will be internal, anything that touches a supplier/customer can affect the experience and is a risk. (See lars’ well done write up of VRM as a short + comments). 

Wholesale drag: as mentioned above, historically 6-15% of LOTZ’s vehicles sold are done so through the wholesale channel.  These are units that did not sell in a reasonable time period at retail.  If they are owned or subject to profit sharing then they are a depreciating asset with an embedded reconditioning investment that are sold at a loss.  Hopefully a larger more national hub portfolio as well as new sourcing focused hires can help keep this drag to a minimum although it likely cannot be avoided entirely. 

Warrant (and earnout/RSU) overhang: there are 113.7m primary shares outstanding and 23.875m warrants and earnout shares (including unvested RSUs). The stock must more than double before any of these securities begin to be in the money.  ($11.50 for the warrants which have a current illiquid price of ~$1.57, and $12.50 + $15.00 for the earnout/RSUs). Other SPACS including SFT have cleaned up their warrants early at a discount.  There are also 5.1m of 2011 and 2017 vintage plan options that are in the money at avg. strikes of $1.52 and $3.53 respectively. 

Is this a winner take-all industry?  With its access to capital can Carvana’s scale ultimately allow it to beat the consignment model on price before LOTZ itself can achieve national scale (or even after)?  My view is that given the enormous fragmentation of the industry that this won’t be an issue in the near term and for now in a normalized environment the fiduciary duty to get the best price vs. auctions etc. will support vehicle supply.  The primary alternative for LOTZ’s suppliers is the auction market. Given the diffuse industry structure, if LOTZ succeeds then most of the other large companies probably wouldn’t notice.  The recent disruptors are more of a threat to the smaller dealers that cannot invest to raise the bar on the customer experience.  If AMZN acquires CVNA one day then perhaps I would change my tune out of fear/respect. 

Is the business model scalable nationally? SFT started as a California-based consignment business in 2013 while now-defunct Beepi couldn’t make a peer-to-peer model work in the 2013-2017 time period after burning through $150m of capital.  LOTZ successfully operated throughout the same period and it has opened 8 hubs across six states.  There also appears to be sufficient supply of vehicles in the wholesale channel to offer a long runway.

Could a competitor (either CVNA/VRM/SFT or KMX etc.) replicate the consignment business model?  There is nothing fundamentally stopping them other than it would be a major shift in their business models that to date appear to be working for them. Auction company KAR is a shareholder of LOTZ and LOTZ’s Chief Commercial Officer and GC came over from there.  If LOTZ starts to work then KAR could be an interesting derivative because as of now its LOTZ holdings (7.2m shares of 6.3% of LOTZ including its PIPE participation) are not material and are not mentioned in the KAR 10-K’s or Q’s since it is a $2B market cap company..        

Lock-up expiration coming up – the transaction closed Jan 21 so July 21 is an important date to note. The senior management and 21% pre-IPO holder and PIPE participant TRP Capital Partners will be free to sell (subject to other restrictions as large holders).   Most of the rest of the non-senior management private company CarLotz shareholders were not locked up so that supply has already been on the market since the transaction.  

Material weakness in financial controls – never like to see that but the new CFO is remediating.  This is also part of adjusting to being a public company. 

The consignment business model is not legal in Kentucky, Ohio and South Carolina – just FYI. At least this isn’t like payday loans where other states might pile on for consumer protection purposes. 

Additional investment required for electric vehicles? While not relevant today, if the US moves to electric vehicles then there could be some additional reconditioning capex required – I have not heavily explored this but it occurred to me.  Maybe someday they could sell used rockets and hyperloop shuttles (and flamethrowers)! 

Finally I would probably consider this a net negative but LOTZ seems to occasionally get caught up in the reddit meme stock volume explosion (maybe I should join WSB as “$tyxpix!”).  The volume exploded for 2 days in early June (and the price increased from $5 to $7.75 before round tripping).  Perhaps the fact that it has not sustained its gains or interest shows that there truly are no buyers for the stock above current levels right now. 

Catalyst

No immediate catalyst – c’est la vie.  But sometimes that’s value investing right? 

Management gradually recovering credibility

Industry normalization and evidence of its effect on Retail GPU, perhaps as soon as this quarter

Evidence of business model success via cash generation (and perhaps before that, hypothetical pro forma back-out growth spending (steady state) cash generation)  

The Company has adopted a quite strict quiet period policy and is not currently speaking to investors so perhaps post 2Q communication/outreach could be a small catalyst

Also GS/ DB and Barclays were involved in the SPAC transaction, have asked questions on the calls and have not initiated coverage yet (and may not but aren’t they supposed to?) So that may drive some interest from non-VIC types if they do.  For reference William Blair and Barrington have already launched on LOTZ