As the curtain falls on 2024, a significant event made waves within the tech investment community: the first-ever humanoid robot company to go public, UBTECH Robotics (HK: 9880), has faced an unexpected and pronounced decline in its stock priceThis downturn, likened to a “Waterloo” moment for the company, marks a stark contrast to the initial enthusiasm that surrounded its debut on the Hong Kong Stock Exchange.

The stock price of UBTECH Robotics endured a staggering decline of 41.95% over a continuous three-day trading span from December 30, 2024, to January 2, 2025. By the close of trading on January 2, its shares were valued at HKD 53, translating to a market capitalization of approximately HKD 22.9 billionRemarkably, during the trading day, the price plummeted further to a new low of HKD 52.80 per share, a stark drop that hints at mounting pressures not only on the company but also on its pre-IPO investors, many of whom are now facing unrealized losses.

Founded in 2012, UBTECH has established itself as a prominent player in the humanoid robotics industry, marked by its hefty investments in sales operations and research and development

However, these significant expenditures have consistently culminated in financial losses, leading to persistent liquidity challengesTo counter these issues, the company has engaged in a total of three placements over the year since its IPO, raising approximately HKD 1.154 billion in a quest to stabilize its capital structure amid swirling market uncertainties.

The company's precarious situation was exacerbated by the lifting of restrictions on share sales, leading to a dramatic drop in share priceOn December 29, 2024 — precisely one year since its market launch — UBTECH saw its lock-up period expireThis event, typical for newly listed Hong Kong stocks, presented an opportunity for many early investors with low-cost shares to cash outNot surprisingly, a considerable number of these stakeholders opted to sell, contributing to the swelling tide of selling pressure that besieged the stock at the end of December.

Compounding these market dynamics, UBTECH's prominent shareholder Milbank Capital announced on the evening of December 30 that it had liquidated 0.41% of its UBTECH shares in the open market, realizing approximately HKD 138 million from the sale

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Following this divestment, Milbank Capital stated that it no longer holds any shares in UBTECH, further complicating matters for the company's stock price.

Moreover, December 29 was marked not only by the expiration of the lock-up period but also by a significant change in the company's ownership structureUBTECH’s Chairman, Zhou Jian, along with other major shareholders, terminated their agreement to act in concert, effectively dissolving their collective voting rights over the company's decisionsConsequently, the combined stake of the former major stakeholders fell below 30%, meaning that they no longer retained the status of controlling shareholdersThis shift has triggered speculation among analysts regarding potential disagreements among major stakeholders about the future direction of the company.

Despite efforts from the company to reaffirm stakeholder confidence, including Chairman Zhou's announcement to extend his holding period on H-shares for one additional year, doubts continue to loom

External stakeholders speculate whether the departure from unity in shareholder decision-making hints at fractures within the company regarding its growth trajectory and strategies.

UBTECH's founding year was marked by momentum building through various rounds of financing before the IPOHigh-profile support from notable figures such as BYD co-founder Xia Zuoquan quickly accelerated its growthBy successfully drawing in investment from industry titans like Tencent and iFlyTek, UBTECH secured approximately CNY 5.61 billion prior to its public offeringHowever, despite this impressive backing and an IPO price of HKD 90, shares have now significantly fallen, creating cyclical challenges for pre-IPO shareholders seeking to redeem their early investments.

The present decline is particularly poignant for investors who joined during the earlier stages of UBTECH’s journey, especially those who entered at a fraction of the listing price

Take Xia Zuoquan, for instance; he was among the earliest backers and invested between HKD 0.17 and HKD 0.53 per share during seed funding, yielding significant returns some years later despite the current market scenarioConversely, newer investors are now grappling with losses, illustrating the complex dichotomy of fortune within the investment landscape.

This mounting loss of confidence is not an isolated incident, as UBTECH’s financials depict a troubling narrativeThe company has chronicled consecutive losses since its inception, and while 2024 has shown signs of revenue generation with reported figures reaching CNY 480 million in the first half, the outflows on sales and research expenditure continue to outstrip incomeUBTECH reported total revenues of CNY 817 million, CNY 1.008 billion, and CNY 1.047 billion from 2021 to 2023, with losses of CNY 920 million, CNY 975 million, and CNY 1.234 billion during the same periods

The ongoing capital burn to sustain operations signifies urgent liquidity concerns.

Amidst this backdrop, UBTECH has looked for further avenues to raise capital, engaging in various placements at different valuations to better facilitate operationsThe company managed to raise over HKD 11.54 billion over three recent placements at declining price points between HKD 92 and HKD 83.88, which were notably lower than the IPO priceThis strategic fundraising approach is indeed reflective of the overarching need to stabilize and nourish the operational aspects of the business.

The question remains whether the strategic repositioning, attacked with new profits and sustained cash flow from operational ventures, is adequate to turn the tide for UBTECH RoboticsAs the market watches closely, the overarching uncertainties present a fascinating yet troubling interpretation of how swiftly fortunes can shift within the burgeoning tech landscape of robotics.