Mobvoi, Google-Backed Chinese AI Developer, Plummets 22% on Hong Kong Stock Market Debut

Mobvoi Inc., a Chinese ai, firm backed by Alphabet Inc.'s Google, saw its shares plummet up to 22% on its Hong Kong stock market debut on Wednesday. The company, known for its Ticwatch smartwatches and voice-activated search services, raised only HK$321 million (around $41 million) in its initial public offering (IPO), substantially lower than the expected $200 million to $300 million target set previously.

The significant drops, raises in Mobvoi's share price marked the third stock debut to flop in Hong Kong this week, contrasting with gains in the broader Hong Kong and Asian stock markets on the same day. The company's stock slumped as much as 22% early in the session before recovering most of the losses to end below the IPO price of HK$3.80 per share, closing at HK$3.68, still 3.2% lower.

Why this matters: Mobvoi's disappointing IPO adds pressure to Hong Kong's ailing equity capital market, which saw IPO proceeds decline to the lowest level in over two decades last year amid concerns over China's economic growth. The lackluster debut also highlights the challenges facing Chinese tech companies seeking to list in the city amid the ongoing regulatory crackdown by Beijing on the sector.

Founded in 2012 by former Google employees, Mobvoi attracted Google's investment in 2015, marking the US tech giant's first direct investment in China since withdrawing its search engine from the country in 2010. However, analysts project a decrease in revenue, gross profit, and gross profit margin for Mobvoi's ai, company enterprise solutions business segment in 2024, indicating a cautious outlook on the company's financial performance.

The slide in Mobvoi's stock price on its first trading day adds to the pressure on Hong Kong's equity capital market, which has seen a decline in IPO proceeds. "The disappointing debut adds pressure to Hong Kong's ailing equity capital market, which saw IPO proceeds decline last year to the lowest level in over two decades," according to the provided summaries. Concerns about China's economic growth and the ongoing regulatory crackdown on the tech sector by Beijing have contributed to the challenges faced by Chinese companies seeking to list in Hong Kong.

Key Takeaways

• Mobvoi, a Google-backed Chinese AI firm, saw its shares plummet 22% in Hong Kong IPO.
• Mobvoi raised only $41M, far below the expected $200-300M target, in its IPO.
• Mobvoi's disappointing IPO adds pressure to Hong Kong's ailing equity capital market.
• Analysts project a decrease in Mobvoi's revenue, gross profit, and margin in 2024.
• Challenges facing Chinese tech firms listing in Hong Kong amid regulatory crackdown.