U Power (NASDAQ: UCAR) stock leapt 619% in its first day on the market after its IPO. It was up as much as 1,150% intraday and then faded off as the day progressed. There was a further fall postmarket of another 22% or so. Such price performance in a recent IPO is often seen as a sign of success. It isn't, it's a dreadful failure. The investment bankers who advised on the pricing were mistaken to the level of incompetence. Such things simply should not happen.
As to what U Power is, well, it's another of those Chinese companies that comes to do a US IPO. As a Chinese company can't do this directly it works through a complex of derivatives which are lodged in a Cayman Islands company. Whether this, really and truly, works in times of distress isn't really known as yet. But it's a common enough technique and all too many want a piece of the Chinese action so it works for now. The line of business seems to be developing battery swapping technology for EVs. Whether that will ever work out is unknown - hey, this is all risk capital, right?
U Power stock price from NASDAQ
We will admit to having significant doubts about whether the base idea even works, let alone the technology. Batteries degrade over time and the idea of pulling in to have a randomly selected one added to your vehicle strikes us as an idea that just isn't going to work out in that real world. But who knows, that we don't grasp it isn't dispositive. There are many things we don't see the point of which work just fine.
However, we really must insist that the U Power IPO was a failure. The entire point of the process is not to please us out here as investors. It is to raise money for UCAR by selling a portion of the company to us out here. The higher the price U Power gets - the higher the IPO price that is - the better this is for UCAR. They get more money for a smaller percentage of the company given up. A 600% - or 1,150% - rise immediately after the IPO shows that they could have sold their stock at a higher than $6 price. They could have got more money. The bigger the pop on IPO day the worse the IPO is. Their bankers should be ashamed of themselves.
