Bird, a shared electric scooter company, announced its filing for bankruptcy Dec. 20, raising questions for the industry and users alike. 

Scooters brandished with the bright blue Bird logo can often be spotted on campus and in Westwood largely because Bird has been the only shared e-scooter and bike company legally permitted to operate on UCLA’s campus since 2019, according to UCLA Transportation. Over the years, the scooters have become a popular choice of transportation for students. Rhea Jain, a third-year environmental science student, said she understands the appeal of Bird for Bruins who sometimes scramble to make the hilly trek to campus.

“It’s better than taking the bus and also just convenient when you’re running late for class,” Jain said. “That’s why students use it.”

Jain added that she applauds Bird’s strategic business with UCLA, especially because of its environmental goal of reducing carbon emissions from car usage.

Despite the popularity and appeal of these scooters, Bird riders received an email titled “Happy New Years & An Important Business Update” at the start of the year announcing the company’s filing for bankruptcy. The email detailed that Bird had filed for Chapter 11 bankruptcy, through which the company will undergo financial restructuring for three to four months.

According to the United States Courts, Chapter 11 bankruptcy entails a process during which corporations propose a plan of reorganization to the court on how it will continue its operations to grow the business and pay its debt off. Comparatively, Chapter 7, which is another primary type of corporate bankruptcy, means that the business is completely shut down and its debt will be discharged.

Bird announced it would continue its operations as usual during its months of restructuring with $25 million in financing from investment firm MidCap Financial, a subsidiary of private equity firm Apollo Global Management.

A major catalyst for the company’s bankruptcy could be the post-pandemic macroeconomic environment. In fact, Bird was not the only company that filed for bankruptcy around that time.

According to NPR’s assessment of S&P data, almost 600 U.S. companies filed for bankruptcy in 2023 because of the rise in post-pandemic interest rates. As the Federal Reserve lowered interest rates during the pandemic to stimulate the economy, corporations could more easily borrow and then spend this borrowed money, taking on relatively high amounts of debt without gauging whether they could repay them when interest rates went back up, according to the same source.

Bird went public on the New York Stock Exchange in 2021 at a valuation of $2.3 billion after receiving over $1 billion in investments from over 70 different investors since its founding in 2017, according to Pitchbook. However, Bird was removed from the public market Sept. 22 because of poor financial performance, as it failed to meet the NYSE minimum requirement for its listed stocks to maintain at least a $15 million valuation for 30 consecutive days, according to CNBC.

Juan Matute, the deputy director of the UCLA Institute of Transportation Studies, said low interest made money relatively cheap, leading to high valuations and investments that may not have been reasonable.

“Bird is that example of an overvalued startup that went from zero to two billion very quickly – not for really any good reasons,” Matute said. “Money was cheap.”

While low interest rates incentivizing poor financial decisions may explain part of the picture, industry-specific factors also affected Bird’s performance.

Superpedestrian, an e-scooter rental company that had received investments of $125 million in 2022, shut down its U.S. operations in December for unspecified financial reasons, according to TechCrunch. Superpedestrian’s shutdown, along with the crash of other micromobility companies such as Micromobility.com, Tier and Spin, may indicate the fundamental issues with the micromobility market. These issues include an ultra-competitive market, city-based regulatory hurdles, technical failures and personal injury lawsuits, according to the same source.

On top of industry-related challenges, Bird navigated several internal issues.

Overstating revenue numbers in 2020 and 2021, violating city laws by placing scooters in mass numbers in unauthorized areas, exploiting low-income contractors and amassing over a hundred personal injury lawsuits all eroded Bird’s reputation and business, according to The Verge, The Washington Post, Wired and The Wall Street Journal, respectively.

Matute added that while Bird’s request for forgiveness rather than permission from the executive management may have worked briefly, it soured their reputation and relationships with important partners.

“Those relationships with cities and campuses have ended up being what’s essential to staying in business,” Matute said. “So Bird had UCLA but didn’t win a ton of other business.”

Matute said a primary factor in evaluating and allowing transportation vendors on UCLA’s campus is the proposed benefits a company could give UCLA. He added that Bird once had the financial flexibility to provide benefits such as free rides as well as other products using the money it had received from investors, but eventually, it was no longer able to support that amount of spending.

While several layers of issues contributed to Bird’s bankruptcy, industry leaders and experts maintain distinct outlooks on what this may mean for the future of shared micromobility.

Lime, which was once Bird’s largest competitor and is the current market leader in shared micromobility, remains an outlier in the industry by being the first electric vehicle company to report profitability in 2023. Lime spokesperson Jacob Tu​​gendrajch said in a written statement that one of Lime’s main pillars driving its success is its strong government relations team, which has been able to win a majority of tenders or bids submitted and also maintain a degree of trust.

With technology company Uber having about a 29% stake in Lime and Lime’s services being offered on Uber’s ride-hailing app, Lime also operates with the advantage of having access to Uber’s 142 million monthly users.

Tugendrajch said in the written statement that despite recent failures within the industry, the future remains bright for micromobility, which some industry experts argue is essential for providing accessible transportation options in LA.

Abraham Cheung and Nick Perloff-Giles, who are both graduates of the Luskin School of Public Affairs, assisted the Los Angeles Department of Transportation with researching the potential for micromobility to make transportation more accessible in underserved areas in the city. They argued that the consolidation of operators and more government ownership and stakes in these currently privately owned companies could provide mutual benefits. Cheung added that a local city-based monopoly in the market would bring consistent profits for one company, while the government could ensure widespread accessibility, especially for those who cannot afford cars or find difficulty with using LA’s public transportation.

Bird’s bankruptcy may point to an ambiguous future for micromobility, but Perloff-Giles said the e-scooter is here to stay.

“I don’t think the industry is completely collapsing. I think it’s maybe going to … consolidate around a few carriers,” Perloff-Giles said. “Particularly, when it comes to UCLA, I think walkable college campuses are about the most lucrative and best use case for scooters so, … I don’t see them going anywhere.”