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Chinese tea company Chagee surged on its Wall Street debut on Thursday, defying concerns about weak investor demand for new US listings and the intensifying trade war between the world’s two largest economies.
Shares in the Shanghai-based chain, which specialises in coffee-style drinks such as “teaspressos” and oolong “teapuccinos”, rose as much as 49 per cent on its first day of trading on Nasdaq. The shares retreated during the afternoon to close 14 per cent higher.
The listing made 30-year-old chief executive Junjie Zhang a billionaire, with his 19.9 per cent stake in Chagee now worth just under $1.1bn.
Chagee sold 14.7mn shares at $28 each, raising $411mn, Bloomberg data show. The stock opened at $33.75, giving the company a fully diluted market capitalisation of more than $6bn. Thursday’s rally comes days after Donald Trump’s administration increased tariffs on Chinese goods to about 125 per cent, stepping up a trade war that economists expect to hit global economic growth.
Chagee’s initial public offering is the largest Chinese listing in the US since electric vehicle group Zeekr raised $411mn last May, according to Renaissance Capital, a provider of IPO research. It also marks one of the most successful New York debuts this year.
Bankers had expected the US IPO market to explode back to life under a Republican administration following a three-year dry spell, but several closely watched listings, including liquefied natural gas exporter Venture Global and data centre operator CoreWeave, earlier this year met with lukewarm investor interest.
Several other large offerings were postponed shortly after Trump’s so-called “liberation day” tariff announcements on April 2, though broader market turbulence had not stopped “a wave” of 24, mostly microcap, Chinese companies from listing in the US this year, said Matthew Kennedy, a senior strategist at Renaissance.
Chagee’s prospectus lists “trade disputes” and changing US “foreign investment laws” as crucial risk factors.
Goldman Sachs this week highlighted growing concerns that Trump may force Chinese companies to delist from US stock exchanges, writing in a note to clients: “In an extreme scenario, US investors may have to liquidate $800bn worth of holdings in Chinese stocks.”
A person close to Nasdaq told the Financial Times the exchange had not heard from the White House on the matter.
Some market participants had questioned why Chagee, which hopes to expand overseas, chose the US, given rival Chinese tea companies Guming and Mixue have surged since they went public in Hong Kong in February and March, respectively.
Those concerns appeared overblown on Thursday as Chagee’s stock surged, however.
Chagee’s business in China was booming, according to the company’s IPO prospectus. It ran 6,440 tea houses — 97 per cent of which are in China — at the end of last year, up 83 per cent on 2023, while net revenues rose 167.4 per cent year on year to just under $1.7bn. Net income rose to $344mn.
US coffee chain Starbucks, in comparison, has 7,600 stores across China.
Citigroup, Morgan Stanley, Deutsche Bank and investment bank China International Capital acted as lead underwriters.
CDH Investment Management, RWC Asset Management, Allianz Global Investors Asia Pacific and Orix Asia Asset Management had indicated their “nonbinding” interest in purchasing 51.7 per cent of the shares set to go on sale, Chagee said in its prospectus.
About 9 per cent of Chinese tea by volume was exported to the US last year as suppliers rushed to beat expected levies under Trump. Chinese tea shipped to the US are set to face a tariff above 100 per cent.
“Serious [US] tea drinkers will be seriously impacted,” said Dan Bolton, tea editor at STiR Coffee and Tea Magazine, adding the drink had historically been one of China’s “greatest ambassadors” and “paved the way for trade and negotiations”.
