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Can Bird’s share price recover following its 97% fall?

Just over a year since going public via a SPAC, e-scooter start-up Birds share price has plummeted, falling 97% in 2022 alone. Flows of capital have dried up and its cash reserves have evaporated. New CEO Shane Torchiana is consolidating the business aggressively, but faces the prospect of delisting from the NYSE.

- Bird Global’s share price fell 97% in 2022

- The company faces being delisted from NYSE

- The Fidelity Electric Vehicles and Future Transportation fell 44% in 2022

In a year when stocks and markets lost value at unprecedented rates, Bird Global [BRDS] was one of the biggest under-achievers. The electric scooter firms share price fell 97.1% through 2022, and 97.9% since going public via a SPAC in November the year before. Its struggles run deeper than the macroeconomic challenges facing all stocks this year; Bird fell 28.3% in the last month of the year alone.

CEO and President Shane Torchiana summed up the situation in Birds third quarter 2022 earnings call in November. Through 2021 Bird stood out in an investment ecosystem that prides companies with high growth potential, with less of an emphasis on the cost of achieving that growth,” he said.

Since going public, Bird has felt that cost keenly. In the past year, the company has received a delisting warning from the NYSE, laid off 23% of its staff, and left several markets in the US, Europe, the Middle East and Africa. In November, Bird admitted that it had overstated revenue for two years by recognising unpaid ride fares; hours later, it issued a going concern warning.

Profitability nowhere in sight

Torchianas reference to the investment environment of 2021 in Bird’s latest earnings call encapsulates how much the world has changed since. Birds Series D fundraising round in 2019/20 raised $350m and saw the company valued at $2.5bn. At the time of its IPO in November 2021, Birds valuation had slipped slightly, but still stood at a respectable $2.3bn.

Other highly anticipated tech company IPOs to have flopped in 2022 include Zomato [ZOMATO.NS], which debuted in July 2021 but fell 57.6% throughout 2022. Singapore mobility firm Grab [GRAB], meanwhile, has plunged 72.9% since it debuted in December 2021.

Since then, soaring interest rates have stemmed capital for tech companies, and runaway inflation has negated future profitability projections.

Profitability is key in these uncertain times, and Bird isnt anywhere near it. In the nine months to 30 September 2022, Birds net losses increased 91.6% year-over-year to $322.3m. It has burnt through 45.2% of its cash reserves during that time, but only increased revenue by 24.1%.

Bird was losing money on every ride”, a former employee told the Financial Times, so the more cities and more rides it was doing the more money it lost.”

Bird has to reverse this trajectory. Aggressive cost cutting has had some impact; while losses increased year-over-year in the nine months to 30 September 2022, they fell 76.81%  year-over-year in the three months to that date. Nevertheless, Bird desperately needs cash, with reserves of $38.5m and quarterly operating costs of $29..4m.

On 20 December, Bird Global announced a merger with its original and most successful platform partner, Bird Canada,” which will realise $32m additional capital. The merger will consolidate Birds operations across North America, as well as adding additional profitable operations to Birds global platform.”

The delisting threat looms ominously, though. The initial warning from the NYSE set a six month deadline by which time Birds share price was required to hold an average price of at least $1 across a 30-day period. That deadline has now passed, and Birds share price has only fallen since.

A trying year for Birds competitors

A 12 December report from Precedence Research tipped the e-scooter market to grow at a compound annual growth rate (CAGR) of 8.1% to $40.3bn between 2022 and 2030. Major players cited in the report did not include Bird; rather, privately owned firm Cooltra and Anglo-Dutch conglomerate Just Eat Takeaway.com [JET.L] were mentioned as companies driving the expansion of the market. Just Eats share price fell 57.4% in 2022.

E-scooters themselves fit into a number of different themes. Clean energy stocks performed relatively well during 2022 thanks to a boost from Joe Bidens Inflation Reduction Act.

However, electric vehicle and ride-sharing firms arent necessarily the biggest beneficiaries of the IRA. It certainly hasnt helped Birds share price, and perhaps the two best-known EV and ride-sharing stocks, Tesla [TSLA] and Uber [UBER], both had torrid 2022s, falling 65% and 41% respectively.

Taking the Precedence reports figure of $21.5bn as the size of the electric scooter market, the $255.6m revenue forecast by Refinitiv analysts for 2022 gives Bird approximately 1.2% of the global market. Given Torchianas recent assertion that the industry will consolidate to two or three companies, investors may want to spread their bets across the theme.

Funds in focus - Fidelity Electric Vehicles and Future Transportation UCITS ETF

No ETFs hold Bird in any significant quantities. It is a fairly new stock, having gone public just over a year ago, though it isnt held by either the Renaissance IPO ETF [IPO] or the SPAC and New Issue ETF [SPCS]. Its poor performance since listing, combined with its small market share within its theme, are likely factors contributing to ETF managers shunning the stock.

For exposure to the future mobility theme, including several major players in the e-scooter market, investors can select the Fidelity Electric Vehicles and Future Transportation UCITS ETF [FDRV]. The fund fell 44.2% in 2022, reflecting a difficult year for the theme as a whole.

As of 30 December, Tesla is the funds sixth-largest holding with a weighting of 3.3%. The fund also holds a 1.57% weighting in Yadea Global [1585.HK], the Shanghai-based e-scooter and e-bike manufacturer.

Analyst outlook for Bird shares is slim but surprisingly optimistic. Out of three analysts providing 12-month price targets polled by Refinitiv, the medium came to $3.00, a 1,377.8% upside from its recent closing price of $0.20.

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