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An Industry in Crisis: Assuring Stakeholders and Justifying Firm Valuation

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The case describes China’s bicycle-sharing industry at a time of unrest. Following a period of potentially unsustainable, rapid expansion, the industry began to receive a lot of media and public scrutiny. Bluegogo first drew attention to the so-called ‘bike-sharing bubble’ in late 2017, when news broke of the firm’s financial difficulties. A few months later, Didi Chuxing, the ride-hailing giant, acquired part of Bluegogo’s assets. Then in spring 2018, Meituan Dianping bought Mobike, for a sizeable USD 2.7billion.

As industry leaders, ofo and Mobike need to find ways to assure stakeholders that Bluegogo’s difficulties will not go on to infect the entire, nascent industry. Meituan Dianping needs to be able to justify having paid the USD 2.7billion for Mobike to its own stakeholders.

Using China’s bike sharing industry as an example, this case can be used to explore the valuation of companies that constitute the emergent, global sharing economy.

Learning Objective:

The primary teaching objective of this case is to provide an opportunity for students to apply the theoretical learning they received in class. Specifically, students are able to practice calculating enterprise valuation for a non-traditional enterprise.

The secondary teaching objectives of this case are to educate about recent developments in the P2P dock-less bike-sharing industry in China, as a component of the booming sharing economy in East Asia.

Year of Publication: 2018
Ref. No.: 18/608C
Subjects: Bike sharing
Discipline: Accounting & Control, Finance & Investments
Industry: Entertainment, Hotels, Restaurants, Leisure
Country: Hong Kong SAR
Company: Bike
Languages: English
Pages of Text: 8