Bird Global is an electric vehicle company that operates shared electric scooters and bikes. The company was founded in 2017 and has quickly expanded to operate in over 300 cities globally. However, Bird has yet to turn a profit and has lost over $1 billion since its founding. Investors are eagerly waiting to see if Bird’s business model is sustainable or whether the company is just burning through cash. In this article, we’ll take a closer look at Bird Global’s financials and business model to evaluate if the company is on track to become profitable.
Bird’s Business Model
Bird operates a dockless electric scooter and bike sharing service. Users can find and unlock Bird vehicles on city streets using the Bird smartphone app. Rides cost $1 to start plus per minute fees. Bird handles issues like charging, maintenance, and repositioning of vehicles. The company generates revenue by taking a cut of each ride fee.
Here’s an overview of how Bird’s business works:
– Bird purchases fleets of electric scooters and bikes. These are owned assets of the company.
– Vehicles are strategically positioned around cities for riders to find and unlock via the app. This facilitates on-demand mobility.
– Riders pay to ride Bird vehicles per minute of use and to start each trip. This revenue goes to Bird.
– Bird pays contractors, called chargers, to collect, charge, and reposition vehicles overnight. This reduces vehicle downtime.
– Bird keeps the remaining revenue after paying chargers and accounting for operating costs like R&D, G&A, depreciation, and cost of revenue.
Is Bird Profitable?
No, Bird is currently losing money. The company has posted negative net income every year since it launched. Here are Bird’s key financial metrics since 2017:
Year | Revenue | Net Loss |
---|---|---|
2017 | $0 | -$71 million |
2018 | $15 million | -$100 million |
2019 | $140 million | -$387 million |
2020 | $95 million | -$208 million |
2021 | $188 million | -$189 million |
Q1 2022 | $15 million | -$43 million |
As you can see, while Bird’s revenue has grown substantially, the company has continued to lose money year after year. Bird lost over $280 million in the first quarter of 2022 alone.
Reasons Bird is Unprofitable
There are a few key reasons why Bird is not yet profitable:
– **High depreciation costs** – Bird owns its fleet of vehicles that must be replaced every 1-2 years due to wear and tear and theft/vandalism. This leads to high depreciation expenses.
– **Expensive R&D** – Bird invests heavily in research and development of its vehicles. This adds substantial costs as it tweaks vehicle design.
– **City permit fees** – Bird pays fees to cities for permits to operate its sharing service. These fees can be up to $30 per vehicle.
– **Charger costs** – Bird must pay contractors to charge and reposition its fleet. This makes up around 20% of revenue.
– **General overhead** – Bird has over 1,000 employees leading to high general and administrative costs related to salaries, benefits, office space, etc.
The net result is that Bird’s costs and expenses continue to outpace its growing revenue base. The company is scaling rapidly but not yet at a level to overcome these costs.
Path to Profitability
Bird lost over $600 million from 2019 to 2021. But the company says it has a path to reach profitability in the next couple years. Here are the key factors that could help Bird turn profitable:
Grow Revenue per Rider
Bird makes only a few dollars per ride currently. If it can grow per rider revenue via longer trips, premium products, etc. its margins will benefit significantly. Bird acquired European company Circ which offers e-bikes which generate higher per ride revenue.
Operational Leverage
As Bird scales with more riders and cities, its fixed costs will be spread over a larger revenue base. This operating leverage should improve margins over time.
Fleet Optimization
Bird is working to optimize its fleet management through better positioning, rightsizing vehicles, and predictive maintenance. More rides per vehicle per day will improve unit economics.
Lower Cost Vehicles
Bird is developing its own in-house scooters and bikes to lower per unit costs compared to sourcing from third parties. Lower cost vehicles will reduce depreciation expense over time.
Reduced Overhead
The company will need to demonstrate discipline on general overhead costs like staffing as it matures. Revenue growth must eventually outpace growth in overhead spending.
Risks to Profitability
While Bird expects to become profitable, there are risk factors that could impact its trajectory:
– New regulations limiting sharing in key markets
– Lack of adoption in smaller, suburban cities
– Higher than expected vehicle maintenance or depreciation
– Safety issues or backlash due to accidents
– Rising inflation and costs putting pressure on unit economics
– Continued supply chain disruptions hampering vehicle production
If Bird cannot mitigate these risks, its path to profitability could be pushed further into the future. The company only has a few quarters of cash runway so turning profitable is imperative.
Investor Sentiment on Profitability
Investors have valued Bird stock based on its growth potential rather than near-term profitability. However, public market investors have less patience for losses than venture capital investors. This is evident in the huge 78% decline in Bird’s stock since its IPO in November 2021:
Date | Share Price | Market Cap |
---|---|---|
Nov 2021 (IPO) | $10.40 | $2.5 billion |
March 2022 | $2.45 | $665 million |
October 2022 | $0.47 | $129 million |
Investors are clearly losing patience with Bird’s mounting losses. The company must execute on its path to profitability in 2023-2024 to regain investor confidence. Otherwise, its stock and access to capital could continue to suffer.
Conclusion
In summary, Bird Global is currently losing money and not yet profitable. The electric vehicle sharing company has lost over $1 billion since 2017. However, Bird predicts it can reach profitability by improving unit economics, gaining operating leverage, optimizing its fleet, and boosting revenue per rider. But risks remain, and the company is racing against dwindling cash reserves. Investors have hammered Bird’s stock price due to its continued losses. Proving it has a viable path to profitability in the next 1-2 years will be critical for Bird to succeed as a public company. The company faces substantial challenges, but the growth opportunity in shared micromobility is vast if Bird can capitalize on it profitably.