Is ShiftPixy Inc (NASDAQ:PIXY) A Smart COVID-19 Play?

Shares of ShiftPixy Inc (NASDAQ:PIXY) had the stock market buzzing yesterday after exploding to $15 before settling at $9.69 a share on huge turnover of 39 million shares. The run-up comes on the back of the company signing a deal with an operator of 11 Del Taco Restaurants Inc (NASDAQ:TACO). With the stock trading lower in the after-hours, we are taking a look to see if the dip should be bought. NASDAQ:PIXY Daily Chart

About ShiftPixy

First up, here's a little background info on ShiftPixy for those that aren't familiar with the stock. NASDAQ:PIXY is a disruptive human capital management platform, revolutionizing employment in the Gig Economy by delivering a next-gen mobile engagement technology to help businesses with shift-based employees navigate regulatory mandates, minimize administrative burdens and better connect with a ready-for-hire workforce. With expertise rooted in management's nearly 25 years of workers' compensation and compliance programs experience, ShiftPixy adds a needed layer for addressing compliance and continued demands for equitable employment practices in the growing Gig Economy. Learn more at www.shiftpixy.com.[embed]https://www.youtube.com/watch?v=eikfArKjQ50&feature=emb_title[/embed]

All-In-One Digital Restaurant Solution

The excitement surrounding ShiftPixy relates to its disruptive, comprehensive technology platform specifically designed for restaurants is now available for free, without initial investment, to help restaurant operators and entrepreneurs as they face the unprecedented impacts of the COVID-19 crisis. Offering a digital platform that manages everything from online ordering through to native delivery driver management, ShiftPixy is making its revolutionary technology more readily available so that restaurants can focus on doing what they do best – offering a great food experience. Scott Absher, CEO and co-founder of ShiftPixy, said:

“As restaurants across the country confront the difficult realities that this pandemic has forced upon us, we saw an opportunity to support their efforts by making it easier to manage all facets of their business on a single technology platform and without the burden of upfront costs. As part of our Restaurant Resilience Plan, we are in the business of making restaurants better and we are more committed than ever to helping them weather this storm.”

In addition to the free implementation of its platform, ShiftPixy also offers HNOA (hired, non-owned auto liability) insurance to each of its delivery tickets to further ease the struggles of restaurants shifting to a delivery-first environment. Further, ShiftPixy is waving all delivery fees throughout the crisis.

Del-Taco Franchisee Deal

Yesterday, ShiftPixy announced a deal with Diamondback DTNM, LLC (DBA Del Taco), operator of 11 Del Taco restaurants in the Albuquerque, NM area, to comprehensively implement ShiftPixy’s disruptive platform across all locations in the face of the Coronavirus pandemic. The Del Taco franchisee is leveraging ShiftPixy’s end-to-end platform for human capital management and native delivery. Scott Absher, CEO and co-founder of ShiftPixy, said:

“The upheaval from COVID-19 has forced restaurants to re-think their approach to customers, employees and third-party alliances. The folks at Diamondback understood that ShiftPixy was uniquely positioned to help solve critical issues forced on operators but also as leverage to thrive beyond the current crisis. With the ShiftPixy platform, John Bissell and his team were able to quickly and effectively revamp their infrastructure to deploy native delivery, allowing them to focus on delivering a great food experience while also keeping the commissions they were losing and better engaging with their customers.”

What's The Excitement About?

On the surface, the deal with Diamondback is just for their 11 stores. Once the market read this, shares of ShiftPixy sold off. However, taking a closer look, this is a pretty big deal. For one, Del Taco serves more than three million guests each week at its approximately 600 restaurants across 15 states. The folks at Del Taco are certainly going to pay attention to what Diamondback is doing. John Bissell, VP and COO of Diamondback, said:

“We were already dissatisfied with our legacy providers, and like many other restaurant operators, the pandemic forced us to make integral choices quickly. ShiftPixy offered us the perfect mix of control and services to weather the storm. We’ve saved significant time and capital and have elevated employee engagement. The native delivery solution, which we think is simply amazing, has allowed us to access customers we would not have otherwise reached while maintaining control of our brand.”

Dennis Ekstrom, former COO of QT and now CEO & President and John’s partner at Diamondback added:

“ShiftPixy’s first to market solution is solving major human capital and customer engagement challenges in the restaurant industry. Leadership across the restaurant industry should make this brave and smart move now, to not just survive today but to maximize their unit economics once the current crisis passes.”

QT was one of the largest Denny's Corporation (NASDAQ:DENN) franchisees with 94 stores. As of March 25, 2020, Denny’s had 1,695 franchised, licensed, and company restaurants around the world including 147 restaurants in Canada, Puerto Rico, Mexico, the Philippines, New Zealand, Honduras, the United Arab Emirates, Costa Rica, Guam, Guatemala, the United Kingdom, El Salvador, Indonesia, and Aruba. Denny's could become another major customer for ShiftPixy.

Bottom Line

Currently trading with a market cap of just $14 million, NASDAQ:PIXY is an exciting story among small caps. With the COVID-19 pandemic showing no signs of slowing down, restaurants need to adapt and innovate if they wish to stay in business. ShiftPixy offers an ideal solution for the multi-billion dollar industry. While there might be some selling pressure in the short-term as the shorts pile on, the longer-term picture will lead to a major short squeeze sending NASDAQ:PIXY to new highs above $31 a share.As always, good luck to all (except the shorts)!We will be updating our subscribers as soon as we know more. For the latest updates on the hottest small caps, sign up today!Disclosure: We have NO position in NASDAQ:PIXY or any of the stocks mentioned and have NOT been compensated for this article.Image by stina_magnus from Pixabay