Getaround aims to scale car-sharing platform with HyreCar acquisition
Peer-to-peer car-sharing company Getaround said Thursday it will acquire the assets of HyreCar, another car-sharing marketplace, for $9.45 million. Getaround expects to realize up to $75 million of run rate annualized gross booking value from the deal, which the company says will contribute to positive adjusted EBITDA profitability.
"At this acquisition price point, we believe this deal will deliver strong long-term value for Getaround stakeholders," said Sam Zaid, CEO and founder of Getaround, in a statement.
Getaround's stock soared 135% in after-hours trading on the news, reaching a high of $0.80. That spike was still not enough to bring Getaround back into compliance with the New York Stock Exchange, which issued a delisting warning in January because the company's stock price was trading below the $1 mark over a 30 trading-day period.
Getaround first debuted on the public markets in December after merging with a special purpose acquisition company. The combined company's stock began trading at around $10 per share, but promptly plummeted. To date, Getaround's stock has lost 96% of its value.
Since the start of 2023, Getaround has received separate delisting warnings from the NYSE because its global market capitalization over a 30 trading-day period was less than $50 million and because it did not file timely earnings reports with the U.S. Securities and Exchange Commission.
Getaround still hasn't reported fourth-quarter and full-year 2022 earnings, despite the fact that we are well into the second-quarter of 2023 and other companies are now reporting first-quarter earnings. A spokesperson for the company said the delay is because Getaround is "finalizing a very technical post-SPAC accounting process and audit" and expects to report "in the coming weeks."
Until then, the best insight we have into Getaround's financials is the "selected preliminary unaudited financial results" for 2022 that the company shared on March 31, which say Getaround closed the year with $64.3 million in cash and cash equivalents. That money will likely be used to fund the HyreCar acquisition; Getaround said it will pay for the startup with cash on hand and expects the deal to close May 16.
Getaround has historically pursued a strategy of scaling aggressively, which has given it a network that Getaround claims is 20x larger than its nearest competitor. That scale, however, has come at the cost of sustainability. According to Getaround's third-quarter 2022 earnings, the company's revenue declined and operating costs increased for the first three quarters of 2022 compared to the year prior.
The HyreCar acquisition might result in a similar outcome, providing Getaround with scale and reach while ultimately increasing costs of operations.
HyreCar's assets include access to its community of tens of thousands of gig drivers, but that healthy demand was part of why HyreCar declared bankruptcy. The company reportedly had more demand than it did access to vehicles, and had been attempting to solve that problem by forming a joint venture with AmeriDrive, a large fleet operator. That deal fell through, followed by an $8 million debenture transaction that never closed and mounting legal fees from an array lawsuits and investigations. HyreCar filed for bankruptcy in February.
Used car rental dealership Holmes Auto had agreed to buy HyreCar for $7.75 million, but Getaround outbid the company at auction earlier this week.
HyreCar brings other assets to the table, including extensive user data and strong risk management solutions, according to Zaid. We'll keep our eyes on how the buy contributes to Getaround's financials and operational costs in the long run.