- UCAR stock rose 620% on Thursday IPO.
- U Power is a Chinese battery-swapping company.
- IPO shares priced at $6 sent as high as $75 on Thursday.
- UCAR stock shed some 35% at Friday's open, moving back to $28.
It had to come back to earth eventually. Following Thursday's statospheric IPO, U Power (UCAR) stock is down 35% at the open on Friday to $28. After listing its shares at $6, the Chinese micro-cap focused on EV battery-swapping technology saw its shares rise as far as $75 before closing just above $43.
The NASDAQ, S&P 500 and Dow were flat at Friday's open.
U Power stock news
Very little is known about U Power. The micro-cap stock says it has a vision to become "a comprehensive EV battery power solution provider in China," but it does not appear to have any revenues to speak of at the moment.
Trading on Thursday had to be halted 22 times due to the volatile price action of UCAR stock. The reason for the price action moving so wildly is that the company only sold 2,416,667 shares at IPO. Small allotments at IPO mean that demand can easily overtake supply quickly, which is why the stock moved up 620% in just one session. When it traded up to $75 mid-session, its return was above 1,000% briefly.
This type of Chinese IPO has happened a number of times over the past few years with other lightly-traded stocks like Magic Empire Global (MEGL) exploding 5,800% on its IPO in mid-2022 before eventually giving back 99% of its gains. The NASDAQ briefly halted all Chinese IPOs last October to look into the issue. What all of these issuances have in common is that they offer microscopic floats in order that demand easily exceeds supply.
U Power is expected to have gross proceeds of just $14.5 million following the IPO after underwriting expenses. The stock was led by a single book runner – WestPark Capital – although Orientiert XYZ Securities Limited was listed as a co-manager. The company said it will use the proceeds for "developing and marketing UOTTA-powered EVs, manufacturing and developing UOTTA-powered battery-swapping stations, developing and upgrading UOTTA technologies, and working capital purposes."
U Power stock forecast
The sell-off in U Power stock means that bulls will look for another entry. Most of these micro-cap Chinese stocks have a few days of surges before bulls give up and take their profits. Thus far, we have seen some resistance around $40 and some support in the area between $28 and $32. Interestingly, U Power is not yet in overbought territory on the Relative Strength Index (RSI).
UCAR 30-minute chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD appreciates as US Dollar remains subdued after a softer inflation report
The Australian Dollar steadies following two days of gains on Monday as the US Dollar remains subdued following the Personal Consumption Expenditures Price Index data from the United States released on Friday.
USD/JPY consolidates around 156.50 area; bullish bias remains
USD/JPY holds steady around the mid-156.00s at the start of a new week and for now, seems to have stalled a modest pullback from the 158.00 neighborhood, or over a five-month top touched on Friday. Doubts over when the BoJ could hike rates again and a positive risk tone undermine the safe-haven JPY.
Gold downside bias remains intact while below $2,645
Gold price is looking to extend its recovery from monthly lows into a third day on Monday as buyers hold their grip above the $2,600 mark. However, the further upside appears elusive amid a broad US Dollar bounce and a pause in the decline of US Treasury bond yields.
Week ahead: No festive cheer for the markets after hawkish Fed
US and Japanese data in focus as markets wind down for Christmas. Gold and stocks bruised by Fed, but can the US dollar extend its gains? Risk of volatility amid thin trading and Treasury auctions.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.