Bird Management Directors Move to Boost Investor Sentiment With Buyback, Reverse Split

Micro mobility company Bird Global (US:BRDS) took further measures this past week to boost investor sentiment in an effort to recover its share price.

Since coming public in early November 2021 in a blank-check company merger, the BRDS share price has lost most of IPO luster and value.

Bird is an electric vehicle company founded in 2017 by transportation pioneer Travis VanderZanden. The company focuses on providing affordable and environmentally friendly transportation solutions, such as e-scooters and e-bikes, in more than 350 cities worldwide.

The company’s board approved a 1:25 reverse stock split, a move aimed at expanding opportunities to attract investors. The reverse stock split was approved by Bird’s stockholders at a Special Meeting of Stockholders held on May 18 and came into effect in trading on Friday.

Management Purchases

In addition to the share consolidation, BRDS management in a press release disclosed that they had purchased over 1.5 million shares in the days leading up to the announcement.

The  certain officers and directors, including CEO Shane Torchiana along with Chairman and VanderZanden, have disclosed completed purchases of BRDS shares on market, totaling over 1.5 million shares purchased.

According to data compiled on the Fintel platform, Torchiana bought 150,000 shares at around 11 cents each, worth a total of $15,000. The CEO owned a total of 7.92 million shares (pre-split) after the trade.

Founder VanderZanden took a larger swing, buying 1.5 million shares at around 11.5 cents each. The transaction boosted his share count ownership to 25.13 million (pre-split).

Both executives also bought shares in the earlier approved period back in March.

These two directors were not the only officers to buy shares in the company. Newly appointed Board member Philip Ryan and CFO Michael Washinushi also bought shares in the company over the last three months.

In total, four net insiders have purchased 1.76% of BRDS float in the last three months. These factors are all bullish elements that contribute to Fintel’s high Insider Sentiment Score of 93.73 for BRDS.

This score ranks the stock in the top 1%, at 64th, when screened against 14,869 other globally screened securities for the highest levels of insider buying activity.

“Senior leadership has continued to purchase shares due to the disconnect between share price and our expectation to increase long-term value by generating free cash flow,” said CEO Torchiana in a May 19 statement. “We are optimistic about our ability to reach profitability as the weather improves from the winter months,” he added.

Weather Helps

With these positive results and an optimistic outlook for cities in the Northern Hemisphere as the weather improves, Bird has kept its focus on reaching profitability and increasing shareholder value — or attempt to anyway.

Looking at the recent financial results for the first quarter that were published in recent weeks, Bird said that gross margins increased by 15 basis points to 17% of revenue when compared to the prior year.

Ride Profit (before depreciation) also saw a positive trend, reaching $14.9 million vs $10.1 million in the prior year. Additionally, negative cash flows from operations improved to outflows of $21.7 million, improving from $42.6 million in Q1 last year.

A chart and table from Fintel’s financial metrics and ratios page for BRDS, clearly highlights the trends of cash flows for the business from its three main sources.

We can see that cash from operating activities has exhibited improving trends as per managements commentary.

Despite these positive indicators, Bird reported a decline in revenue, from $35.4 million to $29.5 million, and a net loss of $44.3 million compared to a net income of $7.7 million in the prior year period.

However, on an underlying basis, adjusted EBITDA losses narrowed from $39.4 million to $15.6 million, demonstrating the company’s efforts to optimize spend and achieve its targeted 2023 goals.

A chart from Fintel highlights the effectiveness of management in the form of several operating measurements.  We noticed that the most important indicators — being cash ROIC (CROIC) and operating cash ROIC (OCROIC) — have shown declining trends over the first quarter.

While this may be due to seasonal trends, we expect these to improve with operating conditions over the next two quarters as most of its end markets enter the summer period which is expected to translate to increased demand.

Analysts Remain Bullish

Looking ahead, Bird maintains its focus on profitability and free cash flow generation, expecting adjusted operating expenses of approximately $100 million, adjusted EBITDA in the range of $15 million to $20 million, and positive cash flow of $5 million to $10 million.

While the recent efforts are positive steps for management to improve the share price, profitability and underlying positive free cash flows are what will ultimately improve investor sentiment.

For the most part, analysts in the market seem bullish on the medium-term outlook for the company, as explained by the Fintel consensus target price of $5.58 (pre-split).

That consensus suggests that analysts think the stock could potentially recover half of its losses that have been incurred since listing.

This article originally appeared on Fintel

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