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Students will be able to analyse competitive situations of the focal firm in the platform market, factors that make the focal firm become dominant in the sharing economy through the technology platform and the focal firm’s motives and growth strategies through mergers and acquisitions and overseas expansion, as well as give recommendations on the focal firm’s strategies to move forward to achieve and maintain its competitive position in the platform market.

On 4^th April, 2018, Meituan-Dianping (Meituan), a Chinese group-buying website for consumer products and retail services acquired Mobike, a Chinese dockless bike-sharing platform for US$2.7bn. Mobike had raised several rounds of funding for its large investments and operations in this highly competitive and cash-intensive industry. However, it was still struggling to survive and make a profit in the Chinese and overseas markets. It was believed that the merger between the companies was the only viable alternative. Had Meituan’s Chief Executive Officer made the right decision in acquiring Mobike? After Mobike became an integral part of Meituan, what should be done to turn this technology platform to be profitable in the Chinese and overseas market?

The case is intended for senior undergraduate or graduate-level courses in business schools.

Teaching Notes are available for educators only.

CSS 11: Strategy.

The case illustrates the application of the prospect theory to risk-seeking investor behavior. It also provides an example that standard valuation methods such as discount cash flow), discount divided model and price multiples are not always applicable to value a stock. The students are exposed to a real situation where investors turn risk-seeking. The case offers insights into why irrational investors are attracted to risky assets and their probable socio-demographics.

This case illustrates a case when investors become risk-seeking and how the prospect theory explains the investors’ risk appetite. Energy Earth PCL is a coal importer and distributor incorporated in Thailand. Its shares had been suspended for trading before the Stock Exchange of Thailand allowed temporary trading in July 2019. A series of unfavorable events leading up to the temporary trading period suggest that the company’s financial health was severely distressed. Its book value was presumably negative and its going concern was threatened. However, investors still bought the shares with the hope of hitting the jackpot. The case presents an example of the psychological aspects of humans when investing in a stock market. With an application of the prospect theory, irrational risk-seeking behavior explains the motivation to invest in risky stocks.

Introductory finance course.

Teaching notes are available for educators only.

CSS: 1 Accounting and Finance.