All Helbiz crushes in red
First the sudden growth in an already inflated sector, that of sharing scooters, then the quotation and the breakthroughs in food delivery and entertainment. Then the journalistic investigations into the founder Palella, the first layoffs and the deep red in the accounts. What's going on in Helbiz?
Active in the field of scooter sharing , as well as food delivery , launched in Milan in 2021 and also announced in Turin at the beginning of the year, and television entertainment for sportsmen , Helbiz, Salvatore Palella 's Italian-American mega startup (and if it is true that pictures are worth a thousand words, here is his Instagram to find out more about the entrepreneur), he may have taken the proverbial stride longer than he can. Because if it is true that diversifying interests equals diversifying risks, it is equally true that an entrepreneurial schizophrenia in the early phase risks drowning one's reality in a very red balance sheet. But let's go in order and start from the past glories.
2021: THE LISTING IN NY
The company founded in 2018 had managed to list on the New York Stock Exchange, an unexpected goal for many startups. The landing on the Nasdaq had already arrived in 2021 thanks to a business combination operation with the listed SPAC GreenVision Acquisition Corp. The operation brought cash receipts of approximately 24.5 million dollars before deductions for commissions due to the placement agent and other expenses related to the offer.
THE ARRIVAL IN OTHER COUNTRIES AND IN NEW SECTORS
The listing has allowed Helbiz to expand micro-mobility services to other cities in Italy, Europe and the United States and to develop activities related to the other business lines of the group: Helbiz Kitchen with food delivery services and Helbiz Media with live streaming services, accessible with Helbiz group apps. The listing on the Nasdaq had therefore raised 20 million dollars in cash, to which another 51 million were added from the issue of bonds, of which 30 million in bonds convertible in November by a single investor.
THE REPORT INVESTIGATION
The mega growth of the startup had attracted several investigative journalists, including those from the editorial staff of Report (which had highlighted how "Many shadows emerge from Palella's past", denied by the director concerned).
THE ACCOUNTS INCREASINGLY RED
Helbiz has now closed 2022 with a net loss of 82 million dollars, 10 more than the previous year, as emerges from the files compiled to the Sec. "The sharing micromobility market is in its first steps and if it does not continue to grow , it will either grow more slowly than we expect or it will not grow as much as we expect our business, financial conditions and our results could be adversely affected”, reads the Form 10k filed on March 28 with the Sec, the US Securities and Exchange Commission, in relation to the risks highlighted for the mobility division.
HUNTING FOR NEW INVESTORS
“We have been operating at a loss since inception and these losses will likely continue,” it reads, “we may never be profitable or generate sufficient profits to distribute dividends to our shareholders. Until we achieve profitability, we will need to look for other sources of capital to continue operations. We will need additional capital to fund our operations, which, if obtained, could result in substantial dilution or significant debt service obligations. We may not be able to obtain additional capital on commercially reasonable terms, which could adversely affect our liquidity and financial position."
THE TELEVISION STUMBLE
As for Helbiz Live, reports LaPresse , it seems to have turned out to be a predictable boomerang: "We may have overestimated the appeal of the Serie B League and of the other content available on the platform and therefore we may not get enough subscribers", not a surprise, considering the well-known competition in the streaming media sector.
NO EXIT STRATEGY?
We recall that the Helbiz Media division in Italy signed a three-year contract worth 12 million per season in 2021 for the rights of the Serie B League for broadcasting on its Helbiz Live platform and their marketing abroad. “We are exploring options to sell our operations operated by Helbiz Live and may not be able to do so – it reads – In an effort to streamline our business and reduce operating losses, we are exploring options to sell our Helbiz business and our rights on the content contained here. If we do not make such sales, we will have the choice to either discontinue such trading or continue with such loss-making trading."
THE PALELLA DIET
2023 for Helbiz had started under the banner of a strong slimming diet. “Helbiz today announced cost reduction initiatives to further streamline the business to better consolidate active operations and focus on core revenue-generating activities.” This is the early January release with which Salvatore Palella's scooter company greeted 39 staff members. The scope of the workforce reduction was communicated as an attempt to accelerate “the Company's path to profitability by imposing a new level of fiscal discipline that preserves the ability to commercialize and scale operations while eliminating excess costs” .
This – reads the company website -. reduces employee base outside Europe by 15% and improves operating costs with cost savings of approximately $1.6 million annually. Helbiz has guaranteed that it will provide support and assistance to those affected during this transition."
THE DECISION ON LAYDOWNS AFTER THE MERGER WITH WHEELS
Helbiz has decided to proceed with the layoffs after completing the merger with Wheels which took place last October. The transaction, as explained in the company release , has allowed Helbiz to offer a new patented vehicle ( Wheels ), to expand its presence in the United States and to add an individual long-term rental business. The intention is also to double the annual turnover.
Wheels, as Forbes writes, is an electric mobility platform that has been operating in the US market since 2018, the year it was founded by Jonathan and Joshua Viner, veterans of the micromobility and shared transport sector. The signing of the agreement brought to Helbiz not only a proprietary and patented next-generation electric vehicle, but also over five million users, exclusive contracts serving B2B partners and universities, a team dedicated to accelerating expansion in the United States United. “After completing the merger with Wheels – continues the press release -, we have identified several opportunities to streamline operations and reduce costs,” said Salvatore Palella, CEO of Helbiz. But at the moment it seems to have been yet another ballast on the Group's shaky accounts.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia-on-demand/helbiz-rosso/ on Fri, 19 May 2023 09:37:40 +0000.