In the late 2010s, micromobility was a buzzword that could boost startups step foot on something and billions of dollars in funding. But the unprofitable model of buying scooters and e-bikes and renting them out had begun to wane even before the pandemic hit the sector. The move to the public market is too late for the hype.
Consolidation means that two US companies lead the pack: Bird and Lime. The Santa Monica Bird startup went public last year through a Spac valuing the company at $2.3 billion. Shares have since fallen by more than a third. Undeterred, Lime is gearing up to go public this year.
Hopefully Lime will show that they have a much larger fleet than their rivals. However, it has expanded under unfortunate circumstances. In 2020, amid a pandemic boom in customer numbers and workforce layoffs, Uber took the lead. 170 million dollars Investments in the company included the sale of its own loss-making bicycle and scooter business Jump.
At a reported $510 million, the investment slashed Lime’s valuation by about three-quarters.
As with Airbnb, which also completed a shutdown in 2020, Lime had little choice. It can expect a much higher market value. The question is whether the rental of electric bicycles and scooters can be profitable in everyday circumstances. Bird’s financial situation doesn’t look promising. Sales in 2021 compare favorably with the 2020 shutdown, but the company still lost $37 million on $65 million in revenue last quarter. This happens after it tries to reduce the loss by work with partners to manage your vehicles.
Lime announced that it was profitable on an adjusted ebitda basis last quarter. But it is still lossy. Last year, it raised $418 million in convertible debt from investors including the Abu Dhabi Growth Fund and a $105 million premium secured term loan. Many cities are choosing to support micro mobile device vendors, and the company is touting expansion plans. But until it breaks even, funding will be needed just to keep the day-to-day operations on the road.