Bird’s weak stock market performance impacts the entire e-scooter industry

Bird’s first-quarter earnings show a company struggling to maintain user numbers and revenue — two legs of the shared micromobility market’s profitability. Bird managed to cut costs, this would be the third stage, but it was not enough to convince investors that the scooter company can find a path to profitability.

Bird shares fell nearly 19% after its first-quarter earnings release and are 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 given that Bird was down in nearly every important metric, this may signal bigger problems in the shared micromobility market.

As one of the only publicly traded e-scooter companies, Bird’s performance on the stock market is significant for the entire shared micromobility industry. If the bird withers, private players may struggle to attract investors, a reality that is already unfolding.

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

Bird has struggled since going public through a special-purpose acquisition merger in November 2021, a trend that is sweeping mobility SPACs. There are hardly any SPACs that perform well today, largely because many of these 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 entire market. Bird moved to an asset-light business model that relies on a fleet manager program to generate revenue. Under the model, contractors lease fleets of Bird vehicles and deploy the vehicles on behalf of Bird. The consequence has been less control over the placement of vehicles.

Bird also has to jump on the removable battery bandwagon that companies like Lime have gotten, which has likely increased the cost of operations and reduced asset utilization.

After burning boatloads of money, Bird has been trying to get his act together. The company’s new CEO, Shane Torchiana, who came on board in September, has been leading Bird’s cost-cutting strategy, including exiting dozens of unprofitable markets.

Last year, Bird also laid off 23% of its staff and shut down its retail scooter product. These savings are being made during the first quarter of 2023; Bird spending is definitely down. But the company doesn’t seem to generate enough revenue for these cost-cutting measures to make a difference.

Bird’s financial results for the first quarter of 2023

Bird reported revenue of $29.5 million in the first quarter, down from $35.4 million in the same quarter of 2022. Quarterly, that revenue is also down from $40.9 million in the fourth quarter of 2022. 2022. (Reported revenue in the fourth quarter was actually $69.7 million, but that included a one-time sweetener of $28.8 million. The sweetener was Bird playing back years of lost revenue above.) Cost of revenue was $24.5 million, meaning that once again Bird barely broke even on a gross profit basis.

Bird walks and deployed vehicles were also reduced. In the first quarter, Bird recorded 5.2 million trips, down 29% on a year-over-year basis and almost 37% on a quarterly basis. That means Bird also sees fewer trips per deployed vehicle per day. In the first quarter, Bird recorded 0.9 trips per vehicle deployed per day, down from one trip per vehicle deployed per day in the same period last year.

Bird manages to keep costs down. The company reported $40.6 million in total operating expenses, down from $100.2 million in the first quarter of 2022. On an adjusted basis, Bird’s operating expenses were $30.6 million dollars, a decrease of 39% compared to the period of the previous year.

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

Not only does Bird not seem to be generating enough revenue to cover the cost of operations, but the company remains free cash flow negative at -$25.3 million. Of course, that’s better than the negative free cash flow of $106.2 million 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 enough to keep the company going. 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 will have to curtail or discontinue some or all of its operations, or even file- bankrupt

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

Another red flag to watch out for: Bird requested an extension from the US 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 about risks, lawsuits, investigations and acquisitions. Asking for an extension suggests that Bird has financial difficulties or management problems.

Bird’s outlook for 2023 is unchanged from last quarter. The company aims to achieve adjusted EBITDA of $15-20 million and free cash flow positivity of $5-10 million. Bird expects its adjusted operating expenses to be about $100 million.