Energy Monster, one of the leading Chinese power bank sharing (or in fact, power bank rental) startups (and no relation to the energy drink), has filed for IPO at Nasdaq.
A business model once dismissed as a fad, power bank rental has become a very profitable business in China, at least for the leading players.
According to its IPO prospectus, Energy Monster, under the holding company name Smart Share Global, recorded a 2020 revenue of US$430 million and a net profit of US$11.56 million. By the end of 2020, registered users (cumulative) reached 219.4 million.
All good and promising, except … the net income shrunk by 55% from its 2019 peak:
Of course, a large part of that was due to the Covid-19 pandemic, which affected China during the first half of 2020. Not only usage shrunk (as for many weeks people were stuck indoors), merchants (where power bank cabinets are deployed) also demanded higher commission. Sales and marketing costs rose by 55%.
The biggest threat to Energy Monster, and other independent players, is competition from Meituan. The super app company, that is already profitable through food delivery, has offered many, many things to its merchants, including power banks as well as POS systems (and even direct procurement).
But maybe Energy Monster does not have to worry too much, because now Alibaba is its largest shareholder. Surely Alibaba won’t let its bitter rival Meituan win in this race?
However, it is worth noting that Ele.me, which Alibaba invested and eventually acquired, has lost to Meituan in food delivery market share in China. (We mentioned about that, and Meituan’s success formula, in Momentum Works Food Delivery Platforms for Southeast Asia report).
And not to mention the common fate to companies Alibaba acquired, including Lazada.
For those trying to replicate this model in other countries, we have already run an analysis on why it did not succeed in Singapore.