In just about a week, iRobot, Luminar, and Rad Power Bikes all filed for bankruptcy.
While they’re quite different — selling Roombas, lidar, and e-bikes, respectively — as Sean O’Kane, Rebecca Bellan, and I discussed on the Equity podcast, they share some similar challenges, like tariff pressures, failed major deals, and struggling to expand beyond their initial successful products.
You can read an edited preview of our conversation below, with Sean providing an overview of each filing, Rebecca discussing whether she owns a Roomba, and me pondering what popular narratives might overlook about these bankruptcies.
Sean: Rad Power is a significant player in the e-bike market, but many people might still see it as small since e-bikes remain somewhat niche. Founded long before the pandemic, Rad Power gained popularity as a leader in producing high-quality bikes with solid branding and marketing, which isn’t easy to find in the e-bike world where many brands feel like just random names on Amazon.
During the pandemic, they thrived as micromobility gained traction, and people reconsidered their transportation methods while not commuting to offices as much. Their bankruptcy filings provide a glimpse into their revenues; they’ve shown figures for the last three years. In 2023, they made over $100 million — around $123 million — but this dropped to about $100 million last year, and during this bankruptcy process, they were down to around $63 million. Clearly, they were coming down from a significant peak. Although they had a diverse product lineup, they struggled to establish a firm foothold.
You could say similar things about the other two companies. Luminar was founded in the early 2010s and emerged from stealth mode in 2017, aiming to make lidar sensors, previously bulky and expensive, more accessible for autonomous vehicle applications. They secured some significant deals, especially with Volvo and Mercedes Benz, but their heavy concentration on that sector contributed to their recent bankruptcy.
iRobot is the most recognized of the three, and many listeners probably have a Roomba or something similar at home. This situation is typical; iRobot became synonymous with vacuuming robots, but the rapid technological advancements left them looking for a way out. We all saw their attempt to be acquired by Amazon, which was ultimately blocked by the FTC, leading us to where we are now.
They all faced similar hurdles. Do either of you have a Roomba?
Rebecca: No, I don’t have one. They kind of freak me out! But I did buy my mom a Rad Power bike years ago, and she loves it. Still, they didn’t just face bankruptcy; there were battery issues too. They couldn’t carry out necessary recalls because they feared going bankrupt if they did. But now they’re bankrupt anyway!
I’m curious about the impact of tariffs on their finances. On social media, you often hear people argue that blocking mergers by the FTC leads companies toward bankruptcy or makes them more likely to be acquired by foreign firms instead of American ones.
Sean: iRobot symbolizes a larger global trade dilemma. Could this company have ever thrived in the U.S. with a localized supply chain over the past 15 years? Probably not. This reliance on China likely allowed other companies to emerge and replicate what they did. It reminds me of when Trump imposed tariffs on Chinese imports, affecting numerous startups in the micromobility sector. Those tariffs were definitely contributing factors. The battery recall issue for Rad Power was a significant blow in the end, but the tariff situation certainly put them at a disadvantage.
Anthony: Often, when a company faces failure, there are larger structural issues at play alongside immediate problems. In the case of iRobot, many former executives and outside analysts point to the Amazon deal set a few years back, which faced EU opposition and ultimately contributed to their downfall. Blocking that deal seemed to deliver a fatal blow to the company.
This narrative, however, might overlook other reasons they sought acquisition in the first place.
