Public Venture

After A Torrid Year, Notable Chinese Tech IPOs Stumble

Earlier this week, the Wall Street Journal published an article about the apparently shaky investment climate in China. The report cited a rocky Chinese stock market, which has been less than kind to previously highly valued Chinese unicorns.

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Xiaomi and Meituan-Dianping, which reached the top of the global unicorn charts while private, are not faring as well in public life.

Xiaomi, China’s affordable smartphone and internet of things device manufacturer, raised a known total of $3.4 billion (inclusive of debt) as a private company and was valued at $46 billion in 2014. The company, which was known for walking a fine line on IP regulations and very slim margins on its smartphones, eyed an IPO valuation of $100 billion.

After scaling back its original goal and then pricing at the bottom end of its HK$17- HK$22 range, Xiaomi made $4.7 billion in it’s IPO and was valued at $54 billion, just over half of that earlier goal. Since then its stock has declined. At its last close, the company hit an all-time low. Its market cap declined to HK$263.255 billion or about $33.6 billion.

Similarly, Meituan-Dianping, China’s online-to-offline (O2O) retail company that emerged out of the Groupon craze in the early 2010s, went public in September. The conglomerate raised a known total of $7.3 billion from investors including Booking Holdings, Tencent, China Resources, and Temasek, and reached a valuation of $30 billion before going public.

Meituan-Dianping priced at the upper half of its share price range at HK$69 (about $8.79), raising $4.2 billion in its IPO and reaching a valuation of $53 billion. Notably, the company was reported to have originally targeted a $6 billion raise in its IPO, but lack of profitability may have affected that goal.

During its debut, Meituan hit a share price high of HK$74; however, since October 10, it has not passed the HK$69 mark. The company’s last close was $HK52, and its market cap HK$275B (or about $35.05 billion)—a valuation decline of nearly 40 percent.

Investor interest in Xiaomi and, even more so, Meituan led to huge valuations but, as of right now, those high hopes are seemingly dwindling. And they aren’t the only Chinese companies with low numbers. Here’s a brief look at some other Chinese tech stocks that are struggling to hold on to first day IPO share prices.

Qutoutiao (NASDAQ)

  • IPO Share Price: $7.00
  • All Time High (ATH): $20.39
  • Last Close: $5.20
  • Percent Change: -25.7 percent from IPO price (-74.5 percent from ATH)

From CB News: Under The Hood of Quotoutiao’s IPO Filing

Pinduoduo (NASDAQ)

  • IPO Share Price: $19
  • All Time High (ATH): $30.48
  • Last Close: $17.20
  • Percent Change: -9.5 percent from IPO price (-44.2 percent from ATH)

From CB News: Walnut Street Group, The Parent Company Of Ecommerce Shop Pinduoduo, Files To Go Public

NIO (NYSE)

  • IPO Share Price: $6.26
  • All Time High (ATH): $13.80
  • Last Close: $5.95
  • Percent Change: -5 percent from IPO price (-56.9 percent from ATH)

From CB News: The NIO IPO Looks Like A Huge Gamble, Chinese Electric Car Maker NIO Said To Price IPO At $6.25 Per Share, After Raising $1B In IPO, NIO Falls In Early Trading, Chinese Electric Car Company NIO Soars After IPO

X Financial (NYSE)

  • IPO Share Price: $9.50
  • All Time High (ATH): $20.30
  • Last Close: $7.53
  • Percent Change: -20.7 percent from IPO price (-63 percent from ATH)

From CB News: This Week’s IPOs: Farfetch, Eventbrite, And X Financial, X Financial Raises $104.5M In IPO, Begins Trading Today

If this is at all indicative of the Chinese investment market as a whole, that’s not encouraging. However, as the Wall Street Journal noted, investors are still showing interest in other startups (see Bytedance), and this may give them some leverage.

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