Scooter Invasion — Feedback Requested

A flash of green. A gust of wind. In the nick of time, I jumped aside, barely avoiding a collision.

If you’ve stepped foot in any major city in the last year, you probably know what I’m talking about.

Scooters… scooters everywhere.

My latest run-in with these things — a “Lime” to be more precise — was during a visit to my publisher’s office in Baltimore. And let me tell you, the city is filled with them.

If you’ve seen it in person, it’s almost laughable — business men in suits, lined up riding scooters on their way to grab lunch.

Man Riding Scooter

But business professionals aren’t the only ones utilizing this form of transportation… and Baltimore certainly isn’t the only city taken with scooter-frenzy.

Since their launch two years ago, electric, scooter-sharing services have grown into a nationwide phenomenon.

Despite their popularity, they’ve also been getting a lot of hate… and after my own experience, I was tempted to join that pessimistic chorus!

But before I jumped the gun, I did a little digging. And that’s when I realized — this trend is not just a passing fad.

Here’s what I found…

Addressing the Last Mile Problem

For most people, the morning and evening commute is torture.

And for many, particularly those in cities, their journey doesn’t even end when they park their car in a nearby garage.

They still have that last stretch to get to work… or to get home. That’s what’s called the “Last Mile Problem” — the awkward distance that’s too long to walk but too short (or implausible) to drive.

Not to mention the people that live in urban areas, where grocery stores and other essentials can be a 20-minute walk from home. And the walk back with pounds of bags on your arms can be near-impossible.

With more people migrating to urban areas, the Last Mile Problem is spreading. Especially since owning a car can mean parking a mile away from where you live… and many are simply going car-free altogether to save money.

This is creating a huge market for e-scooters.

Since they’re dockless, after unlocking the scooter on their phone, riders can hop on, head to their destination and leave the scooter on the sidewalk for the next person to use. It’s a convenience that’s hard to beat.

Plus, the average trip length is less than two miles and only costs about $3… making it cheaper than other ride-sharing options.1

But at such low prices, you might be wondering how the popular e-scooter companies like Lime and Bird make money.

The answer is… they’re not doing so well. Despite raising billions of dollars in investments in a record amount of time, the start-ups are burning through cash trying to perfect this brand-new system.

These growing pains have fueled critics that call for the end of the e-scooter era.

What they’re overlooking are the huge players that want in on this revenue stream… companies that have the capacity to capitalize off the idea better than the idea’s founders.

Riding the Rise of Micro-Mobility

All that talk of carless urban areas might have you worried about carmakers… but they’re already a step ahead.

After seeing the rise of this trend, many auto giants like Hyundai, Audi and Mercedes-Benz are creating their own e-scooters.

Ford even bought out e-scooter brand Spin and is currently deploying its models in cities across America.

As long-established companies, these carmakers have the resources to grow their brands and make scooters that will last longer than their predecessors.

Because they can afford to delay profits, they can focus on building the infrastructure needed for success — which will help the success of the e-scooter industry overall.

Just yesterday, thousands of scooters hit the streets of San Francisco. And with other major cities like Washington DC planning to double its scooter amount to 10,000 by the end of 2019, this trend is not going away anytime soon.2

Areas may regulate by limiting numbers or coming up with rules to keep pedestrians and riders safe…

But brace yourself, because with prominent players stepping into the game, I expect we are going to see a lot more of e-scooters in the future.

And as long as no one runs me over, I’ll accept it.

What do YOU think about this phenomenon? I’d love to hear your thoughts.

Do you hate it? Do you think it’s a viable transportation option? Or too dangerous?

If you could spare the time, please click here to let me know how you feel about the e-scooter trend.

I appreciate your feedback!

Yours for Weekly Profits,

Alan Knuckman

Alan Knuckman
Floor Trader, The Daily Edge
EdgeFeedback@StPaulResearch.com

1 “2018 E-Scooter Findings Report,” 2018, Portland Bureau of Transportation.
2 “There Could Be up to 10,000 Scooters on D.C. Streets Come January,” Luz Lazo, Oct. 7, 2019, The Washington Post.

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Alan Knuckman

Alan hails from the home of options trading in Chicago, where he began working as a clerk on the floor of the Chicago Board of Trade (CBOT). Beginning with his days on the floor, Alan’s worked with all aspects of the options markets for the past 25+ years.

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