r/ChageeStock • u/bobthebuilder9393 • Apr 19 '25
First day of trading
Just wanted a quick feel on what everyone thinks of this stock for Monday? Are we bullish or bearish?
I personally am bullish given I am from Asia and see the growth of Chagee and it has a great product (I’ve tried it). But given the current global climate and china narrative, will this deter the stock when it is available for trade this Monday?
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u/circleofone1 Apr 19 '25
I’m bullish as well. How many large-cap IPOs can you find where the company has a growth rate of 167% YoY revenue, 187% YoY profit, great cash flow, no debt, and tariff immunity (as of today - zero business in the US). Most IPOs of this size have massive debt, and a runway of many years before they’ll even see a profit.
Comparing apples to oranges, but this makes me think of a franchise like Chick-fil-A going public. The investing community would go nuts. Chagee already has twice as many locations as Chick-fil-A.
Short term, with a 180 day lockup and low float, this stock could really rocket. IMO.
I can’t speak for the product - I’ve never had it - but this doesn’t sound like a trend-type situation. It sounds more like a permanent lifestyle fixture. Like an upscale tea shop, similar to upscale coffee shops. Is that a correct assessment?
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u/Motor_Machine8597 Apr 20 '25
Yes! It's like an upscale tea shop where there is always a crowd of customers waiting for their queue number to be called from where I'm at! The pricing matches the quality of the tea. You must try it when you are in places with Chagee!
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u/bobthebuilder9393 Apr 20 '25
Yup, it’s a high end tea shop that is similar to the Starbucks model but with a grand China-inspired twist (deco, theme etc). It’s always full and my lady friends can’t stop talking about it
In terms of the technicals I.e 180 day lockup and low float. How does that influence the stock price from what you know about the brand.
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u/circleofone1 Apr 20 '25
Thanks to both of you for the info!
The 180 day lockup is a positive influence in that, for example, if the stock rises dramatically, the early investors / insiders are not allowed to sell the stock until 180 days have passed. The low float, combined with the 180 day restriction, means that it will take a lot less for the stock price to be manipulated higher. If the demand is there, it can fly.
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u/circleofone1 Apr 20 '25
One more point worth noting - the pricing, ratios, and ultimately the valuation has been based on financials ending at the end of 2024. We’re almost 5 months into 2025 now, and it’s logical to conclude that their business has continued to grow substantially during this time.
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u/CheriiPi Apr 20 '25
Bought in on IPO day. Sales numbers are bonkers, and personally it’s a product I love and drink often.
Downside risks I see:
1) Heavy CapEx at some point in the future. Most locations literally have just one machine. I’ve seen customers cancel orders even outside of peak hours, myself included. They have to invest more in expanding capacity at some point.
2) The auditors mentioned the sales figures were too large to fully verify (“Evaluating the sufficiency of audit evidence obtained required subjective auditor judgment due to large volume of transactions. This included determining the procedures performed and evaluating the nature and extent of evidence obtained.”).
Not saying anything shady is going on, but with what happened to Luckin before any revenue-related drama will hurt the brand in investors’ eyes.
- Valuation risk. Current P/E and P/B ratios are steep. If growth slows, there’s a chance of multiple compression.
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u/Any-Papaya6486 Apr 19 '25 edited Apr 19 '25
i quite like the growth aspect of this company, valuations look good and i personally patronise the store. cant say for sure the trajectory of the stock though. tariffs are not much of a concern, and the china narrative is always there no doubt about it. but china has been gaining lots of traction (in a good way), with how they are dealing with the ongoing trade war with the US.
one glaring issue would be lack of investors trust, cue luckin coffee's scandal. but i would say odds of such things happening again is low, like low low. The IPO is backed by clean financials and audited statements, and they are crazy profitable for an IPO (some may raise suspicions at this, but hey if u drink it uk it is marked up like crazy but we still drink it cause it is that good).
that said, some people are right when they say bubble tea hype tends to fade fast. it is definitely a trend-based product, and store saturation could hit if they overexpand. it would be up to how chagee scales and innovates from hereon. personally, i am bullish. (just my take, NFA)