The 4 Worst Performing IPOs in 2021

The record low-interest-rate environment set the stage for many companies to make their stock market debuts. According to a Stock Analysis report, there have been a record1,056 IPOs this year, representing a 120.5% increase year-over-year.

However, even though the major stock market indexes have touched record highs, not all IPOs performed well. With the Fed hinting at three interest rate hikes soon, a decline in the number of companies making stock market debuts may be in the offing. Also, several Chinese companies that listed this year have performed poorly due to worsening geopolitical relations between the United States and China. Furthermore, China has increased scrutiny of major overseas listings after the controversial IPO of DiDi Global Inc. (DIDI) was conducted this year.

Given this backdrop, we think it could be wise to avoid fundamentally weak IPO stocks of China-based companies E-Home Household Service Holdings Limited (EJH), Pop Culture Group Co., Ltd (CPOP), Tian Ruixiang Holdings Ltd (TIRX), and Sentage Holdings Inc. (SNTG). Even though these stocks soared in price on their stock market debuts, they have declined significantly since.

E-Home Household Service Holdings Limited (EJH)

EJH, which is headquartered in Fuzhou, China, delivers household services through an online APP platform or call center. The company operates through three segments: Installation & Maintenance; Housekeeping; and Senior Care Services. The stock soared in price on its market debut on May 14, 2021 but has plunged since.

On November 30, 2021, EJH announced that its affiliated variable interest entity, Pingtan Comprehensive Experimental Area E Home Service Co., Ltd., had entered an equity transfer agreement to acquire 51% of Fuzhou Sijie Cleaning Service Co., Ltd. However, this move could take a toll on its already weak financials.

EJH’s operating expense for the quarter ended June 30, 2021, increased 98.7% year-over-year to $17.14 million. The company’s installation and maintenance expenses increased 65.3% year-over-year to $32.20 million. Also, its general and administrative expenses increased 516% year-over-year to $6.86 million. Over the past six months, the stock has declined 95% in price to close yesterday’s trading session at $1.53.

EJH’s weak fundamentals are reflected in its POWR Ratings. It has an overall D rating. Which equates to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

EJH has a D grade for Stability. It is ranked #40 of 46 stocks in the Outsourcing – Business Services industry. Click here to see the additional ratings of EJH for Growth, Value, Momentum, Sentiment, and Quality.

Pop Culture Group Co., Ltd (CPOP)

CPOP is a hip-hop culture company that hosts entertainment events for corporate clients. The Xiamen, China-based concern provides analysis services to advertising and media service providers, and marketing services, including brand promotion and trademark and logo design. The stock hit its 52-week high of $78 on July 1, 2021, after going public on June 30, 2021, after which it declined in price significantly.

For the quarter ended June 30, 2021, CPOP’s revenue from brand promotion decreased 67% year-over-year to $0.80 million. The company’s cost of revenue increased 64% year-over-year to $18.30 million. In addition, its operating expenses came in at $1.39 million, up 2% year-over-year. Over the past three months, the stock has declined 42.1% in price to close yesterday’s trading session at $1.70.

CPOP’s POWR Ratings reflect these weak prospects. It has a D grade for Stability. Within the D-rated Advertising industry, it is ranked #12 of 18 stocks. To see the other ratings of CPOP for Growth, Value, Momentum, Sentiment, and Quality, click here.

Tian Ruixiang Holdings Ltd (TIRX)

TIRX in Beijing, China, operates as an insurance broker serving individuals or institutional customers. It distributes insurance products such as property and casualty insurance, automobile insurance, and commercial property insurance. After making its stock market debut on January 27, 2021, it hit its 52-week high of $103.87 on March 3, 2021 but has since declined in price.

TIRX’s operating expenses for the six months ended April 30, 2021, increased 95.5% year-over-year to $2.10 million. The company’s net loss came in at $0.40 million, up 71.4% year-over-year. Also, its loss per share increased 20% year-over-year to $0.06. The stock has declined 98.1% over the past nine months to close yesterday’s trading session at $1.64.

TIRX’s bleak prospects are reflected in its POWR Ratings. It has an overall D rating, which translates to Sell. It has a D grade for Value, Stability, Sentiment, and Quality. In the Outsourcing – Business Services industry, it is ranked last. Click here to see the other ratings of TIRX for Growth and Momentum.

Sentage Holdings Inc. (SNTG)

Shanghai-based SNTG is a financial service provider that offers a range of financial services across consumer loan repayment and collection management, loan recommendation, and prepaid payment network services. It made its stock market debut on July 9, 2021, posting a near ninefold gain. However, its shares have since retreated in price.

For the six months ended June 30, 2021, SNTG’s operating revenue decreased 24% year-over-year to $1.32 million. The company’s revenue from the consumer loan repayment and collection management business declined 84.4% year-over-year to $0.12 million. In addition, its net income came in at $0.45 million, down 38.3% year-over-year. Over the past three months, SNTG’s stock has declined 49.3% in price to close yesterday’s trading session at $1.23.

Our POWR Ratings reflect the stock’s weak prospects. It has a D grade for Stability. It is ranked #44 of 55 stocks in the Consumer Financial Services industry. To see the additional ratings of SNTG for Growth, Value, Momentum, Sentiment, and Quality, click here.

EJH shares fell $1.53 (-100.00%) in premarket trading Tuesday. Year-to-date, EJH has declined -97.19%, versus a 29.66% rise in the benchmark S&P 500 index during the same period.

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.

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