Three Things (May 13th)

Thursday, May 13th 2021

Commentary

1) Scooter-sharing start-up Bird is going public via a multibillion dollar SPAC deal, but will its unit economics catch interest from investors?

Bird, whose on-demand shared scooters can be found in 200 cities around the world, has fetched a valuation of $2.3B as it merges with special purpose acquisition company Switchback II. As one of the first movers in the micromobility space, the company has seen impressive growth to date, with revenues growing over +150% year-over-year prior to the pandemic. But what concerns us currently is its unproven unit economics: the company appears to be losing money on every individual ride, even before factoring in vehicle depreciation (and of course, the hundreds of millions of dollars of other expenses associated with operating the company). We believe these unit economics and their potential for evolution will be a key focal point for investors as they size up the company’s public debut.

2) Social commerce platform Poshmark tumbles after posting strong Q1 results but falling short on Q2 estimates

In Q1, Poshmark reported an outstanding quarter with revenue, profits, GMV growth, and active buyer growth all topping analyst estimates and prior guidance. Despite that, the stock tumbled after hours as it reported Q2 sales estimates that fell 1% short of analyst estimates. What we were most focused on and impressed with in Q1 was the strides the company managed to take in pushing ahead its social features, with their newly-launched video listings feature already seeing strong initial traction and the capability to potentially drive the next generation of engagement-driven ecommerce.

3) Texas storms rear their head again in Lemonade’s Q1 results, but with luck won’t impact long-term outlook

In the first quarter of 2021, it was Lemonade to whom life gave lemons. On Wednesday morning, tech-powered insurer Lemonade fell nearly -20% after posting a slight quarterly earnings miss driven by a significant surge in catastrophe losses. The severe winter storms that hit Texas this past February reportedly drew roughly a year’s worth of catastrophe claims for Lemonade over the course of just a few days. Despite that, the company was able to maintain its fiscal year profitability outlook as a result of its extensive reinsurance programs, something we view as a positive indicator of the company’s durability against extreme left tail stress events.

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