Shares of Chinese tea chain Chagee are up 30% during their first day of trading on the Nasdaq Composite stock exchange.
The company, which has been likened to Starbucks (SBUX), debuted on the U.S. market at $33.75 per share, a better-than-expected showing for the stock. Chagee had priced its initial public offering (IPO) at $28 a share, which was the high end of an expected range of $26 to $28. Chagee sold 14.7 million shares, raising $411 million and valuing the company at $5 billion.
Chagee, which was founded in 2017, has grown to more than 6,400 teahouses in China, Malaysia, Singapore and Thailand. In its IPO prospectus, the company said it generated net income of $344.5 million from revenue of $1.70 billion. While Chagee doesn’t have a presence in the U.S., it is planning to open its first U.S. location this year in Los Angeles, California.
Elephant in the Room
Chagee’s IPO went ahead as planned despite several weeks of market volatility and growing tensions between the U.S. and China over trade. Several other companies that were planning to hole their IPOs this spring, such as payments firm Klarna and ticket reseller StubHub, have delayed them, citing “market timing.”
In recent years, fewer Chinese companies have listed their stocks on U.S. exchanges. From 2023 to 2024, the number of Chinese companies listed on the three largest U.S. stock exchanges declined 5%, according to the U.S.-China Economic and Security Review Commission.
Is SBUX Stock a Buy?
As it is too early for any Wall Street analysts to rate Chagee, we’ll look instead at one of its main competitors, Starbucks. SBUX stock has a consensus Moderate Buy rating among 25 Wall Street analysts. That rating is based on 16 Buy and nine Hold recommendations issued in the last three months. The average SBUX price target of $107.45 implies 30.96% upside from current levels.
