Daily Brief - 24 Apr 2024

Hong Kong's biggest IPO, ChaPanda drops about 38% on first day of trading

Hong Kong's most significant initial public offering (IPO) this year didn't go as planned, with ChaPanda, a popular Chinese bubble tea chain, seeing its shares fall by 38% on its first trading day.

The company, which operates 8,000 stores mainly in China, raised about £269 million but received less interest from investors than expected. This lacklustre debut reflects broader issues in Hong Kong's stock market, which has been underperforming.

Experts suggest that the bubble tea market is highly competitive, and loyalty among consumers is low, impacting investor confidence. This downturn is part of a wider trend, with IPOs in the city struggling following cautious investor sentiment.

Spotify achieves record profit, signaling a mature phase in its business

Spotify has recorded its highest quarterly profit ever, marking a significant turnaround with a net income of €197 million after a loss the previous year.

This milestone was achieved through substantial cost reductions, including job cuts and reduced marketing, which Daniel Ek, the CEO, described as a move into a more mature phase of the business. Although these measures have slowed user growth, the company continues to grow its paying subscriber base.

With increased focus on cost-efficiency and strategic pricing adjustments, Spotify is positioning itself for sustainable profitability, reflected in the substantial rise in its stock value.

Revolut ramps up advertising strategy as it awaits UK banking license

Revolut is shifting its business strategy towards advertising sales, leveraging customer data as it continues to wait for its UK banking licence.

The fintech firm has recruited a former TikTok executive to spearhead this new media strategy, aiming to generate significant revenue from targeted ads. Despite facing a valuation dip after decreased investor excitement, Revolut seeks to stabilise its financial position and diversify its revenue streams.

This move comes as part of a broader attempt to embed the app more deeply into users’ daily routines, enhancing engagement and opening new revenue opportunities beyond traditional banking and financial services.