Caocao Mobility Shares Tumble 19% on Hong Kong Debut Amid Financial Concerns and Competitive Pressures

On June 25, Caocao Mobility made its debut on the Hong Kong Stock Exchange, marking a significant milestone for the ride-hailing sector. However, the company’s listing was met with an immediate downturn, as its share price plunged 19% on the first trading day. The disappointing performance contrasted sharply with the pre-listing market interest, prompting concern among investors and industry analysts.

In its global offering, Caocao Mobility issued 44.1786 million H-shares, allocating 30% to the Hong Kong public offering and 70% to international placement. Priced at HKD 41.94 per share, the IPO raised net proceeds of approximately HKD 1.718 billion, with trading in lots of 100 shares. The Hong Kong tranche was 21.14 times oversubscribed, while international subscriptions reached 2.78 times coverage. Despite these indicators of initial demand, the stock’s first-day performance fell short of expectations.

The offering included six cornerstone investors—Mercedes-Benz, Mirae Asset Securities (Hong Kong), Infinity Capital, Gotion High-tech (Hong Kong), EVE Asia, and RoboSense—who collectively subscribed to 22.6424 million shares with a total investment of approximately HKD 952 million. However, the decline in share value immediately placed these investors in unrealized losses, deepening market concerns.

Financial disclosures from the company’s prospectus highlighted critical issues. Revenue stood at RMB 7.153 billion in 2021, RMB 7.631 billion in 2022, RMB 10.668 billion in 2023, and RMB 6.160 billion for the first half of 2024, suggesting an upward trend. However, net profits attributable to shareholders, excluding non-controlling interests, were deeply negative across all reporting periods, amounting to RMB -2.951 billion, -1.972 billion, -1.916 billion, and -767 million, respectively, with cumulative losses over three and a half years reaching RMB -7.606 billion. Concurrently, sales and marketing expenses rose from RMB 506 million in 2021 to RMB 836 million in 2023, and driver subsidies increased from RMB 1.347 billion to RMB 2.096 billion. The growing costs, without corresponding profitability, severely dampened investor confidence.

Caocao Mobility’s 5.4% market share places it second in the domestic ride-hailing sector, yet it lags far behind Didi’s dominant 70.4% share. T3 Mobility, with 5.3%, closely trails Caocao, while other top platforms continue to compete aggressively. Maintaining market position in such an environment requires sustained investment in expansion, subsidies, and R&D. Relative to its main competitors, Caocao's capital strength and brand influence remain limited, fueling doubts about its capacity to expand market share or improve earnings.

A major structural risk lies in Caocao's dependence on aggregator platforms. Between 2022 and 2024, aggregator-sourced orders accounted for 49.9%, 73.2%, and 85.4% of total GTV, with order volumes at 51.4%, 74.1%, and 85.7%, respectively. Corresponding commission payments rose to RMB 322 million, 667 million, and 1.046 billion, amounting to 7.2% to 7.5% of GTV. This reliance increases vulnerability to changes in platform strategy, which could significantly affect revenue and order volume, raising investor concerns.

Regulatory compliance has also been a persistent challenge. From 2022 to 2024, Caocao’s platform recorded a high number of vehicles and drivers operating without required licenses. In October 2024, 50,942 of 592,346 active vehicles lacked transport permits, and 65,555 of 590,583 active drivers did not possess the necessary ride-hailing licenses. The company has been repeatedly summoned by regulators. According to Tianyancha, Hangzhou Uxing Technology Co., the operating entity, received 739 administrative penalties, over 90% of which were due to licensing violations. These compliance failures have adversely affected user trust and brand reputation.

Historically, mobility platform listings on the Hong Kong Stock Exchange have faced similar challenges. Dida Chuxing and Ruqi Mobility, both listed in 2024, saw immediate share price declines. This broader market context, combined with a high retail investor ratio and cautious sentiment, led to significant selling pressure on Caocao’s debut.

The 19% drop in Caocao Mobility’s share price on its first trading day reflects the cumulative effect of financial underperformance, intensified market rivalry, platform dependency, compliance risks, and investor caution. Addressing these core issues will be vital for the company to strengthen its market position and restore investor confidence in the post-IPO period.