Carsharing company Getaround Inc (NYSE: GETR) stock initially soared over 40% in pre-market trading. It is up around 22% at the time of writing. This share price bump comes after a disappointing market debut last week.
Getaround went public last Friday through a merger with blank-check company InterPrivate II Acquisition Corp at a reported value of $1.2bn. The company's share value dropped by more than 65% after its public debut, reflecting the challenging conditions for both special purpose acquisition companies (SPACs) and ridesharing companies in the current market.
What Is Getaround?
Getaround is an online carsharing service that connects drivers who need cars with car owners willing to share their vehicles in exchange for payment. As of 2019, the company had five million users and around 20,000 vehicles available for sharing worldwide.
Getaround is the largest carsharing service in Europe and aims to provide convenient 24/7 access to shared cars in urban areas. To use Getaround, users can book a car, unlock it with their phone, and start their trip.
Getaround remains a pioneer in the ridesharing industry, having been included in the first CNBC Disruptor 50 list in 2013. The company allows users to rent cars and trucks from each other in over 1,000 cities across the United States and Europe.
How Does Getaround Make Money?
Getaround makes money by charging car owners and renters a fee for using its platform to connect and facilitate car sharing. The exact details of how this works, including the specific costs involved, are not publicly available. However, car owners generally can earn money by renting out their cars when they are not using them. At the same time, renters can save money on car rental costs by using Getaround instead of traditional rental car companies.
The company stated that it plans to use its IPO funds to invest in new markets and expand its existing products.
Did Getaround Go Public Via SPAC?
Yes, the public listing of Getaround is the result of a SPAC deal. The merger between InterPrivate II Acquisition Corp. and Getaround, Inc. involved a special purpose acquisition company (SPAC), specifically InterPrivate II.
SPACs are shell companies created specifically to raise funds through an initial public offering (IPO) to acquire an existing company. In this case, InterPrivate II apparently raised funds through an IPO and then used those funds to acquire Getaround.
InterPrivate II was formed on September 10, 2020, and incurred expenses as a result of being a public company and for due diligence. For the year ended December 31, 2021, the company had a net loss of $2,619,935.
GETR Stock Financial Metrics
Being newly listed, Getaround's financial metrics are limited.
Getaround Growth Potential
Getaround, which raised approximately $600m in funding, has experienced rapid growth in recent years, from a series C round of $45m in 2017 to a series D round of $300m in 2018, led by Softbank, with participation from Toyota.
Who is Getaround's Competitor?
Turo, Getaround's main rival, filed for IPO in January but has not yet gone public. Getaround claims to have a stronger focus on the digital experience of carsharing, while Turo relies more on human power and analog processes.
Meanwhile, Getaround primarily targets cities and urban areas, while Turo focuses on travelers.
GETR Stock Risks
The declining prices of both new and used cars are putting pressure on the industry. Online car dealer Carvana is reportedly facing bankruptcy risk or a sharp increase in concerns among its creditors about its financial outlook.
The COVID-19 pandemic hit GETR hard, as the company reported that its usage fell by more than 75%. To soldier on, it raised $140m from investors, including Reid Hoffman and Mark Pincus's investment arm Reinvent Capital. In 2019, Getaround spent $300m to acquire Drivy, a European car-sharing platform.
Getaround's public debut comes at a difficult time for ridesharing companies. Indeed, shares in both Lyft and Uber have been experiencing significant setbacks in recent months.
In November, Lyft reported worse-than-expected revenue and a slowing active user count, leading to a drop in its share price. The company also announced that it would be laying off 13% of its workforce.
On the other hand, Uber reported a net loss of $1.2bn in Q3, but its stock price has risen over the last month after beating analyst estimates and issuing strong guidance for Q4. Despite this, the Uber share price remains down over 38% YTD, and its shares are well below their IPO price of $45.
The economic outlook is uncertain, and a US recession may well be on the cards.
Is Getaround Stock a Good Investment?
There is an argument that a weaker economy could benefit Getaround stock as people look for ways to save money and generate additional income. For the median American household, cars make up 25% to 30% of their household income, so they may seek ways to offset costs or save money.
Nevertheless, this is a speculative investment, and without access to their financial state of play, the GETR stock forecast is hard to project.