(Yicai Global) June 9 – Shares of Zhangmen Education hit the bourse's circuit breaker twice and finished almost 50 percent higher than its initial public offering price on the Chinese online tutoring company's first trading day on the New York Stock Exchange.
Zhangmen's stock price [NYSE: ZME] closed at USD17 yesterday after the Shanghai-based company priced its shares at USD11.50 in its initial public offering. But in after-hours trading, the equity price was 5.4 percent down. The stock had opened at USD16.10 and momentarily surged by more than three-quarters to trigger trading halts.
The tutoring platform raised USD41.7 million by offering 3.6 million shares in its IPO.
Zhangmen plans to use the proceeds of its listing to improve the quality of its courses. Some 50 percent of the total should go into strengthening products and services, and a fifth to upgrade its technical facilities.
Founded in 2014, Zhangmen is not yet profitable. In the first quarter, its net loss tallied CNY497.3 million (USD75.9 million). Revenue was CNY1.4 billion (USD218.5 million).
More than half of the company’s losses in recent years are caused by teachers' salaries, according to its prospectus. A big part of Zhangmen's spend consists of sales and marketing expenses, involving staff pay and user acquisition, it added.
In 2020, Zhangmen's net loss was CNY1 billion and its revenue CNY4 billion.
Editor: Emmi Laine, Xiao Yi