Moore Threads debuted on the Shanghai STAR Market on Friday, experiencing an astonishing 411% surge in its first trading session. The stock price climbed from its Initial Public Offering (IPO) level of 114.28 yuan to 584.98 yuan.
This significant debut makes Moore Threads China’s second-largest onshore IPO of the year, following Huadian New Energy Group’s $2.7 billion deal in July.
The Beijing-based company successfully raised nearly 8 billion yuan, approximately $1.13 billion, through its public sale, valuing the business at around $7.6 billion. The demand for the offering was exceptionally high from the outset.
The retail portion of the offering was oversubscribed by 2,750 times, even after the greenshoe option was exercised. Data from Bloomberg indicates that this is the second most sought-after mainland IPO exceeding $1 billion since 2022.
China's Focus on Domestic Chips Amidst Global Shifts
Earlier this year, Chinese regulators eased listing rules on the STAR Board, a move that has enabled unprofitable companies to go public more rapidly.
Fan Zhiyuan, an analyst at Sinolink Securities Co., highlighted that Moore Threads benefits significantly from the national drive for local replacement of foreign chips. In a research note, he stated that the company is poised to gain from the domestic substitution trend, which is influenced by trade frictions and governmental support for national tech champions. He also noted that Moore Threads is currently the only Chinese company capable of producing general-purpose graphics processing units.
The allocation of funds raised from the IPO has already been planned. The company announced that the proceeds will be invested in next-generation AI and graphics chip projects. A portion of the capital will also be used to cover working capital requirements as production and research efforts scale up.
In the first three quarters of the year, Moore’s net loss amounted to 724 million yuan. According to Sinolink, this loss narrowed by 19% compared to the same period in the previous year. Concurrently, revenue experienced a substantial jump of 182%, reaching 780 million yuan. While growth is robust, profitability has not yet been achieved.
Valuation remains a key point of discussion. In a filing on December 4th, the company disclosed a price-to-sales ratio of 123 times at its IPO price, which is higher than the peer average of 111 times. This valuation gap raised concerns, prompting the company to request its lead sponsor to remind investors of the valuation risks associated with the stock.
Zhang Jianzhong's Vision for Moore Threads Amidst US Restrictions
Moore Threads was founded by Zhang Jianzhong, a former executive at Nvidia. The company initially focused on graphics chips for gaming and visual rendering, later expanding into AI accelerators essential for large language models.
In October 2023, the US Commerce Department added Moore Threads to its entity list, restricting its access to critical technologies. This measure led to job cuts and internal restructuring within the company.
Despite this setback, investor sentiment remained strong. Beijing has continued to prioritize the semiconductor industry as a cornerstone of its technology supremacy strategy. The Star 50 Index, which tracks the largest companies on the STAR Board, has seen a 34% increase this year. Shares of Cambricon Technologies Corp. have doubled during the same period.
The impressive surge of Moore Threads is already influencing the IPO calendar. MetaX Integrated Circuits Shanghai Co., a closely related competitor, commenced its subscription period on Friday.
Furthermore, memory chip manufacturers Yangtze Memory Technologies Co. and ChangXin Memory Technologies Inc. are reportedly considering their own onshore listings, with each potential deal possibly reaching valuations as high as 300 billion yuan.
Recent IPOs across the market have demonstrated significant first-day gains. Market liquidity had been cautious for several months, creating an environment conducive to sharp price movements. Chen Zunde, a fund manager at Guangdong Fund Investment Co., commented that such substantial jumps at debut are understandable. However, he also cautioned that large IPOs could potentially divert funds from other companies and exert pressure on the broader market.
By the close of trading on Friday, Moore Threads had already recorded a gain exceeding 400%. The stock was trading at 584.98 yuan, more than five times its IPO price of 114.28 yuan, with significant trading volume continuing until the market closed.