BEIJING — Unitree's stock has lost roughly half its value in a week after surging 460% on its trading debut, cooling enthusiasm for China's humanoid robot boom. Investors who secured shares in a frenzied subscription sold heavily as doubts mounted over the company's profitability. Analysts said China needs to overhaul its listing rules to stop the boom-and-bust pattern that keeps repeating around initial public offerings.
Chinese companies raised 119 billion yuan (about 24.4 trillion won) through IPOs in the third quarter, surpassing the 114 billion yuan (about 23.4 trillion won) raised in the third quarter of 2023, a boom period, according to Bloomberg on the 25th. Led by ChangXin Memory Technologies (CXMT), a wave of companies benefiting from the artificial intelligence buildout has gone public, and NAND flash maker Yangtze Memory Technologies (YMTC) is preparing a listing of its own.
Unitree, the first humanoid robot maker to go public, rode that wave. Its shares closed at 591.59 yuan on the Shanghai exchange on the 26th, down 1.86% from the previous session. That is about 46% below the intraday high it hit on its first day of trading a week earlier. The stock opened at 1,100 yuan on its debut on the 19th, 629% above its offering price of 150.8 yuan, and closed at 845 yuan, more than 460% above the offering price. It then fell for four straight sessions, closing at 687 yuan on the 20th, 672.41 yuan on the 21st, 603.08 yuan on the 24th and 602.8 yuan on the 25th.
The subscription drew a frenzy from the start because so few shares were set aside for retail investors. The allocation rate for individuals was 0.018%, the lowest ever on the STAR Market. Chinese investors joked that winning shares was like hitting the lottery. Only 7.44% of Unitree's shares were tradable in the early days of the listing, which further fueled the surge.
But the stock halved within days as investors moved quickly to lock in gains, judging that Unitree's valuation had strayed too far from its fundamentals. Ahead of the listing, brokerages had put the company's fair market value at around 100 billion yuan — about a quarter of the 444.9 billion yuan market capitalization it reached on its debut.
Above all, questions about profitability dragged the stock down. Unitree is unusual among humanoid robot makers in that it is profitable, but commercialization remains at an early stage. According to its prospectus, 73.6% of humanoid robot revenue in the first three quarters of last year came from orders by universities and research institutions. Only about 9% went to real end-use settings such as industrial manufacturing, and more than half of the units were used to guide visitors at exhibition halls. First-quarter net profit fell 53% from a year earlier. Decisively, founder and Chief Executive Wang Xingxing said in a keynote speech at the World Robot Conference in Beijing on the 20th that the "ChatGPT moment" for humanoid robots would arrive "in two to three years at the earliest, or five to 10 years at the latest" — a more cautious view than the "within a few years" he offered a year ago — and acknowledged that Unitree lags global rivals in real-world deployment.
Another factor was that funds were drawn away to upcoming large IPO subscriptions, including YMTC and AI chip companies such as Enflame, Kunlunxin and Suiyuan Technology.
The swings have prompted calls to reexamine China's IPO framework as a whole. China sets offering prices relatively conservatively, in part to limit losses for retail investors. But for technology companies such as CXMT and Moore Threads, high expectations combined with limited tradable supply have sent shares up several fold immediately after listing.
Some also argue that Beijing's policy of encouraging early-stage technology companies to list has produced side effects. The government actively supports STAR Market listings by companies in strategic industries such as robotics and semiconductors. Unitree cleared its listing review in just 73 days, raising market expectations. The problem is that many of these companies have yet to enter full commercialization. Shen Meng, a director at Chanson Capital, said the structure amounts to "ordinary investors taking on, after the listing, the risks that should have been borne while the company was still private."
Unitree's plunge is expected to weigh on other robot makers preparing to list. Zhu Feida, associate dean of the School of Computing and Information Systems at Singapore Management University, said that "when similar companies list going forward, investors will adjust their expectations accordingly." The chairman of an asset management firm also warned that "investors got swept up in the narrative of a technological revolution," adding that "every bubble is bound to burst."
