Is Lime Going to Make It?

Mr. Gig

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Dec 6, 2018
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I've been seeing all kinds of stories in the news about Lime (and the other companies too), but this particular story on Lime is making things look pretty bad for the company. People are beginning to doubt whether or not this is really a viable business model.

In a story reported by The Information yesterday, Lime investors were surprised this spring when they found out the company had already spent most of the $70 million it had raised just a few months before.

Lime, if you'll remember, started off as a bike share company. Then suddenly they decided to become a scooter company. That right there makes me very suspicious of them. It's like they don't have any true conviction about what they're doing. So they start off with one thing and the minute they see others doing something else they immediately ditch what they're doing and start copying the others. Personally, I think bikes are safer than these dinky scooters and they could have stuck with the bikes and made that their campaign pitch.

Anyway, it turns out they lost $6 million per MONTH in the first six months of this year! But, that quadrupled by October when they were losing $23 million - PER MONTH!! A company spokesman boasted by saying they expect the monthly loss to fall to $11 million by January. Apparently he doesn't remember that's still twice as much losing per month as they did in the first six months of the year. But after a $23 million monthly loss, I guess $11 million starts to sound pretty good! Maybe they'll throw a big office party when they get to a low $10 million monthly loss!

Lime blames it on expansion costs. They say they were expanding rapidly to new cities to catch up with Bird. But who can believe their story. A report out in October said Bird is losing money on every single scooter trip that's taken. It was learned that the prices they're paying for the scooters is far higher than anyone thought - and higher than they were led to believe by Bird. The revenue per trip and per day is lower than expected and most of all, the scooters are lasting half as long as they thought they would! They are not able to recoup their investment because the scooters die off before they've made enough money to pay for themselves! Also, maintenance and charging is costing more than they thought.

In other words, it's a money-losing business.

And now we have this story showing that Lime is losing millions of dollars a month and their loses are growing every month.

Lime has not only raised hundreds of millions of dollars in venture capital funding, but they've also raised hundreds of millions in debt to pay for the new scooters. So, imagine what happens when you go into debt to purchase a revenue-producing investment and then your investment never produces enough revenue to pay back the debt. What usually happens in a case like that? The handwriting really seems to be on the wall.

Now Lime is desperately going back to the venture capital well trying to raise even more to help pay back some of that massive debt.

(By the way, Lime is like Lyft to Bird which is like Uber).

The crazy thing about how these investors work is they don't seem to care of a company is or can make money - they only care if they can gain marketshare. But even if they gain 100% marketshare - they'd still lose a few hundred dollars on each and every scooter they purchase! And no one is ever going to have 100% marketshare.
 
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