55tuan: A Company in Denial 窝窝团拒不接受现实
Despite turmoil in US markets that has put a halt on most IPO activity, struggling group buying site 55tuan has come out very publicly and said it is aiming to list on the Nasdaq by the end of this year, a goal that probably reflects more on its critical cash situation than any basis in reality. At the same time, another company in need of cash, video-sharing site Xunlei, has officially withdrawn its application for a US listing after demand for the offering dried up back in July. First let’s look at 55tuan, as clearly the company is going through a crisis in the ultra-competitive group buying space. After reports emerged last month that the company had become the latest group buying site to make mass layoffs, 55tuan finally came out last week and admitted making major cuts at many of its offices, particularly in smaller cities. (previous post) Now 55tuan CEO Xu Maodong has come out and reassured the world that his company, which previously had difficulty finding an investment bank to underwrite an IPO, is moving ahead with the offering and expects to make it by the end of the year. (Chinese article) The only problem in all this is that I suspect Mr. Xu and his money-losing company will find little or no demand for their shares from Western investors. That same lack of demand for money-losing Web firms, combined with broader weak sentiment towards US-listed China companies, also caused Xunlei to scale back its plans for an IPO to raise up to $200 million in July, before finally suspending the offering altogether. (previous post) Its latest filing to the US securities regulator indicates it has given up on the deal for now. (Chinese article) But I suspect that unlike 55tuan and rival group buying site Lashou, Xunlei still has sufficient cash to survive for a while longer, and we’ll see it return to market once the current turbulence and negative sentiment toward China stocks subside.
Bottom line: 55tuan’s determination to make an IPO by year end reflect its dire cash situation, with such an offering likely to find little or no demand if it really moves forward.
Related postings 相关文章:
◙ Group Buying Turmoil Grows With 55tuan Layoffs 窝窝团撤站裁员 团购业整合在即
◙ Lashou Ropes in Small Potatoes For US IPO 拉手网聘二流承销商赴美上市
◙ Xunlei’s Shrinking IPO Disappears 迅雷无限期推迟IPO时间
