Shares of Chinese electric vehicle-maker Zeekr made a spectacular start to trading on the New York Stock Exchange on Sunday, rising almost 35% above their initial public offering (IPO) price.
Zeekr’s IPO was the first major market debut in the United States by a China-based company since 2021.
The company’s American depositary shares traded as high as $29.36 after opening at $26, compared with its IPO price of $21. The stock closed at $28.26, up 34.6%.
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The debut gave Zeekr a fully diluted valuation of $6.8 billion, or about half the $13 billion it fetched after a funding round last year.
The discount to last year’s valuation could help draw in more investors to Zeekr, according to Dan Coatsworth, investment analyst at AJ Bell.
“They’re able to buy into a growing business at a fraction of last year’s valuation. Everyone loves a perceived bargain.”
China’s softening stance
Zeekr’s first day of trading ironically came at a time when US President Joe Biden’s administration plans on boosting tariffs on Chinese vehicle imports to the United States.
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Tensions between the world’s two biggest economies have been on the rise over trade, intellectual property, Taiwan and China’s stance on the Russia-Ukraine war.
The number of Chinese companies that have pursued stock market flotations in the US in the past few years has also dropped.
Beijing has blocked domestic firms from listing overseas citing concerns over flows of data. In 2022, ride-hailing giant Didi Global was forced to delist its shares from the NYSE — months after raising $4.4 billion in an IPO — due to backlash from Chinese regulators.
Beijing’s iron clasp on data flows also led to a longstanding audit dispute between the US accounting watchdog and China, which was ultimately resolved in December 2022.
Chinese firms are now required to undergo extensive regulatory and cybersecurity checks at home before they can proceed with pursuing overseas listings.
Zeekr’s listing at a such a time suggests Beijing may now be softening its stance on allowing Chinese firms to list overseas.
Hard times for EV stocks
Zeekr is the premium brand of Chinese automaker Geely, which also owns Sweden’s Volvo Cars and the UK’s Lotus. It was formed in 2021 to tap into growing Chinese demand for premium models and has since delivered nearly 200,000 cars, mostly in China, according to its IPO filing.
Fierce competition in China among domestic rivals and with Tesla has eroded EV makers’ profits, prompting them to look at other markets for expansion.
Chinese automakers BYD, SAIC and Great Wall Motor are all targeting Europe, rolling out electric models as they seek to compete with legacy European automakers on their turf. Chinese EV sales in Europe have soared in recent years.
Zeekr’s blockbuster debut is noteworthy considering shares of EV companies in the United States have lost substantial value in recent months.
Tesla, the leading US EV maker, has shed 30% of its value this year. Similarly, Rivian Automotive has lost 85% since its IPO in November 2021, while Lucid Group is left with a fourth of what it fetched when it signed a deal with a blank-check firm earlier that year.
Strong investor demand
Meanwhile, Zeekr upsized its IPO earlier in the week, indicating strong demand from investors.
It sold 21 million American depositary shares to raise $441 million. It had earlier planned to sell 17.5 million ADSs at a price between $18 and $21 apiece.
“The capital markets in New York are very favourable for new energy vehicles. Zeekr is a global brand, and choosing to list in New York further demonstrates its global capabilities,” said CEO Conghui An, who is also the president of Geely.
Within Geely, Zeekr’s mission is to address the luxury EV market segment, A said.
Geely aspires to become the Volkswagen Group of this era of new energy vehicles, comparing the company to Europe’s top automaker.
Since the start of the year, the company’s deliveries have overtaken its nearest competitors.
Zeekr delivered 49,148 vehicles in the first four months ended April 30. In comparison, rival EV upstart Xpeng delivered 31,214 units and another close competitor Nio delivered 45,673 cars during the same period.
- Reuters, with additional editing by Vishakha Saxena
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EU Warned 50% Tariffs Needed to Curb China EV Imports – FT
