Short-selling firms question business model, causing Via Transportation stock to fall

Investing.com – Via Transportation (NYSE:VIA) stock fell 2% on Tuesday after short-selling firm Bleecker Street Research released a report questioning the company’s positioning as a software platform.

The report argues that Via primarily operates as a labor-intensive transportation contractor rather than a software-driven platform. Bleecker Street stated that after reviewing over 100 contracts of the $2.4 billion market cap company, most revenue is driven by service hours, driver hours, and vehicle utilization, not software licenses.

The report points out that Via’s main upsell method is for local governments to purchase more vehicles and hire more drivers, rather than buying additional software. The short seller also highlighted pricing pressures, noting that major clients like Los Angeles Metro have renegotiated to lower prices or replaced Via’s software with competitors like Spare Labs.

Bleecker Street expressed concerns about the sustainability of Via’s revenue base, stating that most new deployments rely on temporary federal grants or COVID relief funds. The report cites two former Via employees, saying that about 10% to 20% of customer loss is due to grant expirations, and 50% to 80% of pilot costs are subsidized by federal funds. It warns that as COVID relief funds begin to expire in 2026, local budgets will face pressure.

The short seller also criticized Via’s accounting practices, accusing the company of pre-recording large implementation costs and software expenses lasting up to 18 months, which inflates annual recurring revenue. A procurement agreement reportedly included pre-paid software fees accounting for 31% to 153% of the first-year contract total.

Bleecker Street further claimed that Via excludes core variable costs like insurance from its cost of revenue and does not separate support costs from general and administrative expenses, suggesting that these practices inflate gross margins compared to peers like Uber and Lyft.

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