IPO BOUTIQUE has brief thoughts on the way that the Chinese IPO, Qutoutiao Inc (QTT) began trading…
Qutoutiao Inc. (QTT) — This IPO will be the most talked about of the week because of the extreme volatility and the numerous “trading halts” out of the gates. QTT priced a downsized offering at a low-end price of $7.00 and opened 30% above issue price with a $9.10 first trade. The deal rocketed higher from there with an extremely wide spread. Within the first seven minutes, QTT hit a high of $15.99 or 128% above the offering price and ultimately traded as high as 191% before closing at 92% above issue. But in that same timeframe, the trading halts “broadcasted” signs of manipulation. This type of extreme trading, wide spreads and given that it is a Chinese stock will only pour fuel on the fire when it comes to future Chinese stock IPOs. This particular company is very young with immense competition and not even the most optimistic view of this company could justify the valuation at which this company is trading. WIth many Chinese offerings on the calendar for 2018, it is our opinion that this is a type of IPO opening that artificially drums up interest in China with “hopes of getting rich quick” by amateur investors who will now think to “buy all Chinese IPOs”.
Simply put, we think this is not healthy and we think the trading action that we saw today should be examined meticulously by Nasdaq and the SEC.
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