Bird’s weak stock market performance impacts the entire e


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Mar 28, 2023

Bird’s weak stock market performance impacts the entire e

Bird’s first-quarter earnings show a company struggling to maintain ridership

Bird's first-quarter earnings show a company struggling to maintain ridership and revenue — two legs of the profitability stool for the shared micromobility market. Bird did manage to cut costs — that would be the third leg — but it wasn't enough to convince investors that the scooter company can find its way to profitability.

Bird shares tanked almost 19% following the release of its first-quarter earnings and is now trading at $0.12.

Bird's earnings can be treated as the canary in the scooter coal mine for the rest of the industry (although it should be noted that each company has its own unique problems and opportunities). And considering Bird was down in almost every metric that matters, that may signal larger problems within the shared micromobility market.

As one of the only publicly traded e-scooter companies, Bird's performance on the stock market matters to the whole shared micromobility industry. If Bird withers, private players may find it difficult to attract investors — a reality that's already playing out.

Take Tier Mobility, for example. A year ago, the company had purchased Spin from Ford and was the largest shared micromobility operator in the world. Today, Tier is struggling to raise more funds and is reportedly contemplating a merger or a sale with a rival.

Bird has struggled since going public via special purpose acquisition merger in November 2021 — a trend that is sweeping across mobility SPACs. There are almost no SPACs that are performing well today, largely because many of those companies went public before they had established a sustainable business model — and Bird is no exception.

Bird has its own issues that are unique to the company and not necessarily indicative of the whole market. Bird moved to an asset-light business model that relies on a fleet manager program to bring in revenue. Under the model, contractors lease fleets of Bird vehicles and deploy the vehicles on Bird's behalf. The consequence has been less control over the placement of vehicles.

Bird has also yet to jump on the removable battery bandwagon that companies like Lime have succeeded at, which has likely driven up cost of operations and driven down asset utilization.

After burning through boatloads of money, Bird has been trying to get its act together. The company's new CEO Shane Torchiana, who came on in September, has been leading Bird's strategy of reducing costs, including leaving dozens of unprofitable markets.

Last year, Bird had also laid off 23% of its staff and shut down its retail scooter product. Those savings are being realized in the first quarter of 2023; Bird's spending is definitely down. But the company doesn't appear to be generating enough revenue for those cost cutting measures to make a difference.

Bird reported revenue of $29.5 million in the first quarter, a decrease from $35.4 million in the same quarter of 2022. On a quarterly basis, that revenue is also down from around $40.9 million in the fourth quarter of 2022. (Reported revenue in Q4 was actually $69.7 million, but that included a one-time sweetener of $28.8 million. The sweetener was Bird playing catchup on missed revenue from previous years.) The cost of the revenue was $24.5 million, which means that once again, Bird barely broke even on a gross profit basis.

Bird's rides and deployed vehicles were also down. In the first quarter, Bird reported 5.2 million rides, down 29% on a yearly basis and nearly 37% on a quarterly basis. That means Bird is also seeing fewer rides per deployed vehicle per day. In the first quarter, Bird recorded 0.9 rides per deployed vehicle per day, down from one ride per deployed vehicle per day in the same period last year.

Bird manage to bring down costs. The company reported $40.6 million in total operating expenses, down from $100.2 million in Q1 2022. On an adjusted basis, Bird's operating expenses were $30.6 million, a 39% decrease from the prior year period.

But even with severe cost cutting measures, which included leaving several markets and laying off staff, Bird closed the first quarter with a net loss of $44.3 million, compared to a net income of $7.7 million in the year prior.

Not only does it look like Bird's not making enough revenue to cover the cost of operations, the company is still free cash flow negative at -$25.3 million. Granted, that's better than the negative $106.2 million free cash flow in Q1 2022.

As of March 31, 2023, Bird had $12.8 million in unrestricted cash and cash equivalents. The going concern warning that Bird initially issued in November is still very much in effect, as that cash is not nearly enough for the company to continue operating. If the company doesn't raise additional capital or somehow magically generate enough cash flow to even sustain the business it's currently running, it’ll have to scale back or discontinue some or all of its operations, or even file for bankruptcy.

In a regulatory filing, Bird said it plans to continue to reduce operating expenses and pursue additional sources of outside capital.

One other red flag to note: Bird requested an extension from the U.S. Securities and Exchange Commission to file its 10-K, which provides a more comprehensive overview of a company's finances and operations and often includes details on risks, lawsuits, investigations and acquisitions. Requesting an extension suggests that Bird is having financial difficulties or management issues.

Bird's outlook for 2023 has not changed since last quarter. The company aims to reach adjusted EBITDA of between $15 million to $20 million and free cash flow positivity of $5 to $10 million. Bird expects its adjusted operating expenses to be about $100 million.