Unitree’s stock slump since IPO stokes fears of a bubble in Chinese humanoid robotics

Shares in Chinese robotics firm Unitree Robotics surged on Thursday following five consecutive days of declines, erasing nearly half of its market value. However, this recovery did little to alleviate concerns over a potential bubble in China's humanoid robot industry. The stock rose nearly 4% to close at 615 yuan, giving the company a market capitalization of 248.8 billion yuan following a record low of 571 yuan on Wednesday, a 48% drop from its August 19 debut price of 1,100 yuan.

Dong Chen, chief investment officer for Asia at Bank J. Safra Sarasin, questioned the stock's high valuation, citing its high price-to-earnings ratio and the intense competition in an infant industry. Unitree, based in Hangzhou, opened 629% higher than its IPO price when it debuted on Shanghai's Nasdaq-style Star Market last Wednesday.

Despite the market's enthusiasm, founder Wang Xingxing appeared unenthusiastic during the bell-ringing ceremony. Unitree, as China's first listed humanoid robot maker, attracted significant attention as a valuation benchmark for private embodied-AI unicorns seeking an IPO. The company reported producing around 18,000 bipedal humanoids across multiple models by July, with first-quarter revenue rising 68.5% year-on-year to 423 million yuan.

An early investor in Unitree, who wished to remain anonymous, stated that his team had abandoned robotics investments due to the market becoming too expensive and homogeneous, with commercial deployment still far off. While embodied AI remains a promising long-term growth story, some recent hype has been attributed to investor FOMO and a surge of specialist funds launched following the sector's elevation to a national priority.

Nonetheless, Chen argued that one company's performance should not be used to declare an industry-wide bubble. Earlier this month, Citic Securities, Unitree's lead underwriter, estimated the company's valuation at 50.6 billion yuan to 55.9 billion yuan six to 12 months after listing. Even after the recent sell-off, Unitree's market value remained more than four times the upper range of that estimate.

Ying Zhang, an economist at the Economist Intelligence Unit, noted that the listing brought attention to the commercial potential of China's robotics boom, but emphasized that widespread adoption remains hindered by financial and technical limitations.