Bike-Sharing Firms Hit A Dead End In Singapore As Mobike Exits Scene

The faltering bike-sharing industry in Singapore was dealt another heavy blow when Mobike applied to surrender its licence to the Land Transport Authority (LTA), raising questions about the sustainability of the business model in a city where last-mile transport issues remain unresolved.

With around 25,000 bikes in its fleet, the Chinese bike-sharing unicorn holds the title as Singapore’s largest bike-sharing player with operations in 180 cities worldwide including Italy, Britain, US and South Korea. Mobike has over 7.1 million active bikes and over 48.1 million active bike users as of April 2018, according to a prospectus from its parent company Meituan Dianping. The Chinese movie-ticketing company acquired Mobike for a reported US$2.7b in April 2018.

However, financial difficulties in its home market may have prompted Mobike to rethink its global ambitions, said Yunming Wang, venture partner at Quest Ventures. An earlier report from TechCrunch revealed that Mobike reportedly laid off its entire Asia-Pacific operations team as part of its efforts to trim down its regional presence and focus on its Chinese operations.

Losses from Tencent-backed Meituan Dianping widened to $687.22m (CNY3.4b) in the quarter ended December 31 from $444.67m (CNY2.2b) the previous year as revenue failed to keep up with steep costs, according to its financial statement.

“I would say the poor unit economics, combined with high burn and tricky cash-flow issues, plus an uncertain, often oppressive, regulatory environment made the model untenable in Singapore. If Mobike intends to expand across Southeast Asia, I expect it will do so in more regulatory-lax domains, at the very least,” Justin Hall, partner at Golden Gate Ventures said. “When you begin to chase the dragon of increasing valuations, high spend/high-burn financial models, and unrealistic engagement numbers, I think you ultimately have a recipe for disaster.”