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Bird’s Leaked Numbers Detail The High Price Of Scooter Growth

Morning Markets: What has two wheels and isn’t close to breakeven? 

Bird, one of the two leading American scooter companies, is losing money at a terrific rate according to a recent report in The Information.

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The scooter company and its best-known rival Lime have each raised hundreds of millions of dollars (here, here), totaling more than $1 billion between the pair. The Information reports that Bird is seeking $300 million more, matching a sum raised by Lime earlier this year.


That Bird is losing money is neither surprising nor notable. The pace at which it is losing money, however, may be.

When high-growth companies raise cash, they raise it to put the funds to work. Rare is the company that raises money just to sit on it. Lime and Bird have been among the fastest growing companies that we can recall, so their deficits are expected.

But, perhaps, things are more difficult than we anticipated. From The Information:

In this year’s first quarter, [Bird] lost nearly $100 million while revenue shrank sharply to only about $15 million, people familiar with the matter said. In the spring, it told people it was down to about $100 million in cash, even after raising more than $700 million over a year and a half. […]

In the third and fourth quarters of last year, Bird said it generated about $25 million and about $40 million in gross revenue, respectively, the person said. Net revenue was more than $20 million in the third quarter and about $25 million in the fourth quarter, this person said.

So Bird’s revenue has fallen while its losses have continued. The result of such quarters would be dwindling cash. Bird will, therefore, have to raise during a time when its numbers aren’t pointing in the right direction; that’s precisely when you do not want to raise.

Indeed, shrinking from $40 million in gross revenue to $15 million in gross revenue is tough from Q4 2018 to Q1 2019, though Bird did limit discounts according to The Information, so the gap isn’t as sharp as those figures detail.

The company does have a natural advantage in Spring. While warmer weather likely helped the company, whether Bird had a good Q2 or not isn’t clear. But we can presume that the firm lost more money in the period. As such, it probably has less cash than it had when it reported the $100 million figure. That puts a timer on its fundraise, and explains why it wants $300 million and not a smaller sum.

Lime, its archrival, raised earlier this year. That $310 million brought Lime’s valuation to $2.4 billion. Presumably, the green scooter company has enough cash to get it to the fourth quarter. But, with Bird showing that it is possible to lose nine figures per quarter, how long each scooter round may last is somewhat hard to predict.

So it’s double-down time. Lime and Bird have had time to develop new hardware, explore new markets, and have made it through winter. If the companies are going to make it, which is to say if their models wind up proving economically viable or not, will likely be answered this summer.

Which is now. More when we have it.

Illustration: Li-Anne Dias.

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