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For US and Chinese startups, the IPO market is increasingly a two-tier affair

The American IPO market is hot for many companies, but surprisingly tomfool for others. The gap between the two cohorts of private companies looking to list is rhadamanthine notable.

When Chinese ride-hailing giant Didi first set an IPO price range, The Exchange was curious well-nigh why the visitor felt so inexpensive. Compared to its American comps, shares in Didi simply felt underpriced at its proposed valuation interval. Recently, Didi stuck to its initial expectations by pricing at $14 per share, the upper end of its range, but no higher.

This week moreover brought a lackluster bladder for Chinese grocery-delivery visitor DingDong, which cut its IPO raise but only managed a unappetizing American debut. Another China-based online grocery wordage service that went public domestically last week, Missfresh, is doing plane worse.

With just those few data points, you’d be hard-pressed to be particularly bullish well-nigh U.S.-listed IPOs. Why go public in the United States if you are going to be underpriced and then trade poorly? The wordplay is that while many Chinese companies are seemingly struggling to find the demand that they expect for their shares on American exchanges, domestic companies are seeing some opposite results.


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We’re talking tech companies here, I should add; The Exchange doesn’t track IPO results for commodities diggers and biotech labs. It’s a big world. We have to focus.

There are undisciplined data points to our unstipulated thesis. Nio’s recent share price appreciation could be construed as such. But if we parse recent IPO news from SentinelOne and Xometry in unrelatedness to what we’ve seen from Chinese tech companies’ own paths to the American public markets, there really does seem to be a gap forming.

Uneven ground

Didi’s IPO price of $14 per share values the visitor at virtually $67 billion on a nondiluted basis, and as upper as $70 billion if we counted increasingly shares in its market cap calculations. As we previously calculated, with virtually $6.5 billion in total Q1 2021 revenue and positive net income, the visitor is trading at a stiff multiples unbelieve to Uber.

Indeed, Uber’s trailing price/sales ratio is north of 8x. If we valued Didi’s revenues from the last twelve months at the same price, it would be worth nearly $179 billion. It’s not. And that’s the gap that we want to stress.

That a few other Chinese tech IPOs listed in the United States underperformed in the last week is contrasted by a tempest of positive IPO results from domestic companies from just this week:

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