Shares of China’s self-driving technology company WeRide surged by 19% in its debut on the Nasdaq on Friday. Following an initial public offering (IPO) and private placement that raised $440.5 million, WeRide has become the latest Chinese company to benefit from renewed investor interest amid improving market sentiment. The strong performance underscores growing interest from U.S. investors in Chinese firms after nearly two years of market uncertainty, which began with the delisting of ride-hailing giant Didi Global due to regulatory challenges from China.
In late 2022, China resolved a longstanding audit dispute with the U.S. accounting watchdog, which has subsequently eased Beijing’s stance toward overseas listings. “Companies in hot sectors are going to get attention wherever they’re from,” said David Manno, a partner at securities law firm Sichenzia Ross Ference Carmel. Manno added that enhanced disclosures required by regulatory frameworks may now minimize potential issues for Chinese companies listing in the U.S.
As the U.S. IPO market has shown signs of recovery in recent weeks, investors are increasingly interested in promising tech startups after a prolonged slowdown in the industry. “The bottleneck in 2022-2023 has built up the pipeline,” said Matt Kennedy, senior strategist at IPO research firm Renaissance Capital. Kennedy noted that WeRide’s successful listing may not significantly impact the broader tech sector but represents a critical marker for other autonomous vehicle startups and Chinese tech firms eyeing U.S. listings.
WeRide issued 7.74 million American depositary shares at $15.50 each, which was at the lower end of its targeted price range, raising about $120 million through the IPO and valuing the company at over $4 billion. Additionally, WeRide raised $320.5 million in a concurrent private placement. Known for its autonomous taxis, vans, buses, and street sweepers, WeRide is conducting tests and commercial pilot programs across 30 cities in seven countries. The stock was last trading at $18.44, up from its opening price of $15.50.
Challenges Facing Robotaxi Expansion
Despite WeRide’s success, analysts highlight significant challenges in establishing robotaxi services, mainly due to stringent safety and reliability requirements. While China has proactively approved trials for autonomous vehicles, obstacles remain, including accidents and the technology’s limitations in complex driving conditions such as inclement weather, intricate intersections, and unpredictable pedestrian behavior. The Biden administration has also proposed a new rule aimed at restricting Chinese software and hardware in connected and autonomous vehicles on American roads, citing national security concerns.
The autonomous vehicle sector is drawing attention from both private and public entities, with companies aiming to reshape urban mobility. Electric vehicle manufacturer Tesla (TSLA.O) recently unveiled its long-awaited robotaxi and robovan models, while Pony AI, another autonomous driving startup backed by Toyota (7203.T), filed for a Nasdaq listing earlier this month. Commenting on the implications of WeRide’s IPO, Kennedy remarked, “If WeRide performs well, that will be a very encouraging sign for competitor Pony AI.”
Featured image courtesy of Nikkei Asia
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