I’ll admit it—I didn’t expect to find myself this intrigued by a tea company’s IPO. But Chagee, one of China’s fastest-growing tea chains, is brewing up quite the financial blend as it eyes a $400 million raise through a New York listing. It’s not just the bubble tea that’s frothy—investor expectations are quietly fizzing too.
The timing is bold, if not outright cheeky. US-China tensions are hardly a whisper anymore—they’re a full-blown tariff tango, with the SEC and geopolitical hawks scrutinising Chinese listings like never before. Yet here comes Chagee, aiming to list at a valuation up to $5.1 billion. That’s not outrageous, mind you—especially when you stack it up against tech unicorns with questionable unit economics and losses deeper than the Mariana Trench.
Let’s talk numbers—real ones. In 2024, Chagee brewed up $1.7 billion in revenue with a net profit of $344.5 million. That gives it a price-to-earnings ratio in the low teens. Modest, especially when you consider the margins and scale. It’s rare these days to see a consumer growth company with this level of profitability—let alone one still expanding at such a clip. Over 6,400 stores globally and counting by year-end, with most of that growth self-funded? That’s no startup froth. That’s execution.
Tradition pours into tech—Chagee’s brew blends culture with scale
What many investors haven’t clocked yet is Chagee’s operational edge: proprietary brewing tech that cuts drink prep time by 40%. In a sector where queue times can make or break your lunchtime rush, that’s not a perk—it’s a moat. The company’s tech-forward operations also enable higher consistency across locations, which bodes well as they scale internationally.
Now, is this listing a geopolitical gamble? Undoubtedly. The New York route will raise eyebrows. But that might be precisely why the valuation is so conservative. If Chagee had chosen Hong Kong like its peer $MIXUE GROUP(02097)$, it might’ve achieved a richer multiple. Yet here we are—an IPO priced to sell, not to dazzle.
That’s why I believe this could be a textbook day-one pop. Wall Street still loves a growth story—especially one that prints profits. With demand for quality consumer IPOs largely unmet this year, Chagee might just be the right stock at the right time, regardless of its passport.
And let’s not forget the longer-term play. While the Chinese ‘new-style tea’ market is saturated and increasingly competitive, Western markets are still sipping their way through coffee shop chains and uninspired smoothies. Chagee has barely scratched the surface outside Asia, but the brand's premium aesthetic and health-leaning flavours could find a cult following in cities like Los Angeles, London, or Sydney—places where wellness trends and novelty beverages intersect.
They’re also not rushing the global rollout, which I take as a positive. Unlike some competitors who flood new markets with hundreds of stores and hope for the best, Chagee appears focused on margins, store-level profitability, and brand control. It’s more '$Starbucks(SBUX)$ circa 2002' than '$WeWork Inc.(WEWOQ)$ circa 2019.'
Of course, risks remain. A single regulatory headline could send sentiment sour. And as with any company exposed to the Chinese consumer, macro shifts—from youth unemployment to spending slowdowns—can be unforgiving. But in a world where investors have become overly cautious, perhaps irrationally so, Chagee’s listing offers an unusual upside: a solid company going public under the radar.
All in, I see this IPO as less of a wild bet and more of a smart sip. You’re getting growth, profitability, operational edge, and global upside—all at a discount, thanks to the political overhang.
For those brave enough to navigate the noise, Chagee’s IPO might just deliver a welcome jolt to your portfolio—no espresso required.
East meets West—Chagee bridges markets with style and steam
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