The Chinese Aerial Mobility and Drone Company flatlined during their IPO on the NASDAQ last week.
EHang’s projected valuation of up to $800 million USD was in fact a projection – the company closed the trading week on the NASDAQ at a valuation just over $662 million USD, after a net change of 0.08% during the trading day resulting in a price of $12.49 per share.
According to an EHang press release, the company will use the funds to conduct additional technological research and development, expand its global sales channel and production capacity, develop urban air traffic solutions, and for investments and acquisitions.
EHang issued 3.2 million American depositary shares at US$12.5 per share in the IPO and granted underwriters “greenshoe” over-allotment rights to subscribe for up to 480,000 ADSs within 30 days after the issue. The total amount raised was half of the US$100 million EHang disclosed as being its target in its first prospectus issued at the end of October. Greenshoe over-allotment rights allow for underwriters to sell more shares than originally issue if there is greater buying demand than expected.
The original press release for EHang may be read here. Trading of the ADS’s began in mid-to late December and closed December 16th. Morgan Stanley & Co. LLC, acted as the sole bookrunner for the offering, and Needham & Company, LLC, Tiger Brokers (NZ) Limited and Prime Number Capital, LLC acted as co-managers for the offering.
Why it’s important: The reception to EHang’s IPO can’t be drawn as a direct corollary to the public or investor sentiment of the aerial mobility industry, but it can serve as a general barometer for attitude towards exposure to risk and investment in new technologies. Since a very large portion of the company’s revenues come from the manufacturing and selling of consumer drones, EHang is able to take a measured approach toward involvement in aerial mobility, both in technological breadth and financial leverage.