Bird’s SPAC filing shows scooter-nomics just don’t fly

Scooter unicorn Bird is going public, per an agreement to merge with a special purpose acquisition company, or SPAC. After rumors and reports circulated for months about an imminent deal, it has finally arrived.

First, a quick overview of the agreement and the players involved: Bird is merging with Switchback II at an implied valuation of $2.3 billion. Fidelity Management & Research Company will lead the deal’s $160 million in private investment in public equity, or PIPE. Apollo Investment Corp. and MidCap Financial Trust provided an additional $40 million in asset financing. (Disclosure: Apollo is buying TechCrunch’s parent company.)

Historically — and based on what we’re seeing in this fantastical filing — Bird proved to be a simply awful business. Its results from 2019 and 2020 describe a company with a huge cost structure and unprofitable revenue, per filings. After posting negative gross profit in both of the most recent full-year periods, Bird’s initial model appears to have been defeated by the market.

What drove the company’s hugely unprofitable revenues and resulting net losses? Unit economics that were nearly comically destructive.

Some of the numbers Bird shared in its investor deck show a business that is growing, in terms of users and geographic footprint. Bird is in 200 cities globally and reports more than 95 million rides to date, and 3 million new riders added during the pandemic. The investor deck also touts year-round positive economics during the COVID-19 era. That all looks positive. But looking into the line-item financials, a different story emerges.

The scooter shop managed to convert a $135.7 million gross loss in 2019 to a smaller gross deficit of $23.5 million in 2020, but it did not manage to shake up its upside-down economics during its full fiscal 2020.

Update: Bird provided a response to questions about its newer fleet management business and how it expects to stem losses. Their response:

Bird’s history to date has been one of milestones. First was securing product market fit and delivering an eco-friendly way for people to travel in their communities and access opportunities – education, health and economic. The second milestone focused on unit economics and laying the foundation for a sustainable business. Then came the pandemic, which served as a catalyst for us to identify how to scale in a way that allowed us to be profitable at a ride level. As a result, in H2 2020 our ride profit (after vehicle depreciation) was positive and people are continuing to embrace naturally social distanced eco-friendly options.

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