Carsharing company Getaround made its public market debut Friday through a merger with blank-check company InterPrivate II Acquisition Corp. The company saw its share value drop more than 65%, reflecting the chilly environment for both SPACs and ridesharing companies.
Getaround, which made the very first CNBC Disruptor 50 list in 2013, allows users to rent cars and trucks from each other via a digital marketplace. The company launched in 2009 and is available in more than 1,000 cities in the United States and Europe.
The merger had valued the company at about $1.2 billion, and Getaround said it planned to use the funds to invest in new markets and expand its products.
SPACs, or special purpose acquisition companies, raise capital through an IPO to acquire or merge with existing companies, aiming to eventually take the companies public in a two-year time frame. Though SPACs rose in popularity in 2020 and 2021, they tend to significantly underperform in comparison to traditional IPOs.
The appetite for SPACs, which often back early-stage growth companies with little earnings, have diminished in the face of rising rates as well as elevated market volatility. For SPACs that did go public, they haven’t fared well: the CNBC SPAC Post Deal Index has fallen over 60% in the past year.
Public ridesharing companies have been struggling as well. Lyft shares plummeted in November after the company reported worse-than-expected revenue and a slowing active user count, and the business announced the same month that it would be laying off 13% of its workforce.
Uber reported a third-quarter net loss of $1.2 billion in its third quarter, but the company has seen its stock price rise over the last month after beating analyst estimates and issuing strong fourth-quarter guidance. Still, Uber’s stock is down more than 38% year-to-date even as the company has cited booming travel, easing lockdowns and shifts in consumer spending, and it shares remains well below their 2019 IPO price of $45.
Elliot Kroo, CTO and co-founder of Getaround, told CNBC in May that recent increases in car prices led many people to use carsharing services as well as Uber and Lyft.
“What’s happening in transportation is a slow moving kind of shift from ownership to access, and that’s building momentum over time,” he said. “More and more people are looking at alternative transportation options, realizing that car ownership is very expensive.”
However, prices for both new and used cars have dropped from record highs, also putting pressure on online car dealer Carvana, which is reportedly facing bankruptcy risk or in the least a sharp rise in concerns among its creditors about the financial outlook.
Getaround had raised approximately $600 million in funding. Its financing, like many start-ups over the past decade, grew quickly, from a series C round in 2017 of $45 million to a series D in 2018 of $300 million, led by Softbank, a deal Toyota also took part in.
Amid the pandemic, when the company said its usage fell more than 75%, it raised $140 million from Reid Hoffman and Mark Pincus investment arm Reinvent Capital, among other new investors.
In 2019, it spent $300 million to acquire Drivy, a carsharing platform in Europe.
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