SFT WACC - Weighted Average Cost of Capital

The WACC of Shift Technologies, Inc. (SFT) is 8.4%.

The Cost of Equity of Shift Technologies, Inc. (SFT) is 133.50%.

The Cost of Debt of Shift Technologies, Inc. (SFT) is 8.90%.

	Range	Selected
Cost of equity	114.30% - 152.70%	133.50%
Tax rate	26.20% - 27.00%	26.60%
Cost of debt	7.00% - 10.80%	8.90%
WACC	6.8% - 10.0%	8.4%

WACC

SFT WACC calculation

Category	Low	High

Long-term bond rate	4.2%	4.7%
Equity market risk premium	5.0%	6.0%
Adjusted beta	22.03	24.59

Additional risk adjustments	0.0%	0.5%
Cost of equity	114.30%	152.70%

Tax rate	26.20%	27.00%
Debt/Equity ratio	66.49	66.49
Cost of debt	7.00%	10.80%

After-tax WACC	6.8%	10.0%


Selected WACC	8.4%

SFT's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for SFT:

cost_of_equity (133.50%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (22.03) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.