Chinese manufacturer Unitree has had a turbulent first week of trading. After a spectacular surge on its stock market debut, the share price fell several days in a row and lost nearly half its value, the Reuters news agency reports.
Unitree, known for its quadruped robots and humanoids, listed on Shanghai’s STAR Market the previous week. The offering was heavily oversubscribed. In early trading, the share price jumped by more than 600%, lifting the group’s market capitalisation to as much as $66 billion, according to Reuters.
Unitree stock: $30 billion wiped out in a few sessions
The shares have fallen back since that peak. According to Reuters, the stock went from 884 yuan (about €113) to around 600 yuan (about €77). The correction represents a loss of about $30 billion in market value.
These swings are fuelling fears of a bubble and criticism of the Chinese stock market system, the agency notes. The stock’s trajectory is now seen as a sign of an overheated market rather than of a boom in China’s technology sector. Reuters quotes an expert who says that major shareholders profited from the offering while the risk was shifted onto retail investors.
Falling profits behind the Unitree IPO hype
The agency points out that Unitree’s net profit fell by 53% in the first three months compared with the same period a year earlier. According to Reuters, this raises the question of whether enthusiasm for artificial intelligence and robotics has outrun the group’s financial fundamentals.
Analysts quoted by the agency believe investors were drawn less by the company’s accounts than by perceived state backing. Reuters points to a widespread belief that the state would protect small shareholders from financial losses, combined with the lack of any possibility of short selling. As a result, offerings seen as overvalued meet little immediate resistance.
Retail investors are among the biggest losers. The first of them have already shared their setbacks online, the agency reports. Unitree nevertheless remains one of the world’s leading manufacturers of quadruped and humanoid robots, competing with Boston Dynamics among others.
Further reading: Unitree: the maker of the affordable humanoid robot