Author|Xingxing

Source|Beiduo Finance

On October 25, WeRide Inc., an autonomous driving service provider, was listed on Nasdaq with the stock code "WRD" and an offering price of USD 15.5 per American Depositary Share (ADS). On the first day of its IPO, WeRide's share price once rose to USD 19.8 per share before falling back after reaching its peak.

WeRide stated that assuming the underwriters of the IPO fully exercise their options, it will issue a total of approximately 8.9038 million ADSs. With the total proceeds from the public offering plus a concurrent private placement of USD 320 million, the company's fundraising amount is expected to reach USD 458.5 million.

However, WeRide's previously filed preliminary prospectus revealed that the company planned to offer 6.452 million ADSs, with an estimated initial public offering price range of USD 15.50 to USD 18.50 per ADS.

In other words, WeRide effectively offered its ADSs at the lower end of the offering price range. However, in comparison, WeRide increased the number of shares offered. Despite achieving its listing goal, WeRide's market value did not increase significantly but instead "fell back" to the level two years ago.

In addition, WeRide's unformed commercialization path has also been a focus of attention from the outside world.

I. Initial revenue scale, light asset service-led

According to the prospectus, WeRide was established in 2017 and centers around the WeRide One autonomous driving general technology platform, providing users with autonomous driving products and services ranging from L2 to L4, aiming to meet the transportation needs across a wide range of scenarios from urban environments to highways.

Up to now, WeRide has formed five major product matrices, including autonomous taxis (Robotaxi), autonomous minibuses (Robobus), autonomous delivery vehicles (Robovan), autonomous sweeper vehicles (Robosweeper), and advanced driving solutions (Advanced Driving Solution), offering a variety of intelligent driving solutions to the public.

WeRide's core business is divided into two parts: one is the sale of products, including L4 autonomous vehicles such as autonomous taxis and autonomous minibuses, as well as related sensor kits; the other is the provision of services, including R&D services for L4 autonomous driving and Advanced Driver Assistance Systems (ADAS).

Based on business categories, WeRide's sales revenue has decreased from RMB 102 million in 2021 to RMB 54.19 million in 2023, with its proportion shrinking from 73.5% to 13.5%. Meanwhile, the proportion of service revenue has increased significantly, accounting for 86% of revenue by the end of the first half of 2024, indicating a notable shift in business focus.

In 2021, 2022, 2023, and the first half of 2024, WeRide's operating revenue was RMB 138 million, RMB 528 million, RMB 402 million, and RMB 150 million, respectively, showing an overall upward trend. Clearly, after years of cultivation in the autonomous driving sector, WeRide is steadily advancing towards commercialization.

II. Continuous cash burning and losses, but cash flow can still "cover the bottom"

However, it should be noted that WeRide has not yet achieved profitability. In 2021, 2022, 2023, and the first half of 2024, the company recorded net losses of RMB 1.007 billion, RMB 1.298 billion, RMB 1.949 billion, and RMB 882 million, respectively, accumulating to over RMB 5 billion in losses over three and a half years.

Sustained heavy R&D investment is the primary factor contributing to WeRide's deep losses. During the reporting period, the company's R&D expenses were RMB 443 million, RMB 759 million, RMB 1.058 billion, and RMB 517 million, respectively, accounting for 320.7%, 143.8%, 285.5%, and 344.1% of its revenue for the corresponding periods.

However, the autonomous driving industry is characterized by significant upfront investments and long return periods, and most companies are currently in the stage of "losing money through investment." Under Non-GAAP, WeRide's adjusted net losses totaled approximately RMB 1.328 billion from 2021 to 2023, ranking among the top in terms of resource utilization among similar enterprises.

WeRide stated in its prospectus that it primarily funds its operating and investment activities through historical equity financing activities. As of the end of each reporting period, WeRide's cash and cash equivalents were RMB 2.726 billion, RMB 2.234 billion, RMB 1.661 billion, and RMB 1.829 billion, respectively.

As of the end of 2023, WeRide's total cash, time deposits, and financial investments amounted to approximately RMB 4.2 billion. Based on the company's adjusted net loss scale, its cash flow situation can still support its normal operations for several years.

However, given that it has not yet achieved self-sustainability, going public to raise funds remains WeRide's best option.

III. Market value retreats significantly, and financing struggles to fill the gaps

On the first day of its IPO, WeRide's share price rose steadily, peaking at USD 19.8 per share, representing a surge of 27.74%, and triggering two circuit breakers. By the end of the day, the company closed at USD 16.55 per share, up 6.77%, with a total market value of approximately USD 4.491 billion (approximately RMB 32 billion).

However, a longer-term perspective reveals that WeRide's total market value has actually declined. Since its establishment in 2017, WeRide has received a total of ten rounds of funding, raising over USD 1 billion (approximately RMB 7.2 billion), with investors including NVIDIA, Qiming Venture Partners, IDG Capital, and others.

As early as 2022, after completing its Series D funding round, WeRide received USD 400 million in funding, valuing the company at USD 4.4 billion post-investment. The following year, China Development Bank Capital and Cinda Asset Management invested an additional USD 100 million in WeRide, further increasing its post-investment valuation to USD 5.1 billion after the Series D+ funding round.

In comparison, WeRide's current market value has fallen to the level of 2021, shrinking by approximately RMB 4.3 billion compared to 2023. In contrast, Horizon Robotics (HK:09660), another player in the autonomous driving sector, recently listed on the Hong Kong Stock Exchange with a total market value significantly higher than that of WeRide.

Regarding its U.S. listing, WeRide's founder and CEO Han Xu said, "The successful listing is a new starting point for us. WeRide will continue to adhere to technological innovation and bring safe, comfortable, and convenient autonomous driving products and services to users in more countries and regions."

Although WeRide has revealed that it aims to commercialize its autonomous taxi service in 2024 and early 2025, its business model has yet to be proven at this stage. Validating and exploring the path to scale will become a significant drain on WeRide's capital base.

More realistically, the external investment environment for the intelligent driving market is also cooling down. According to an incomplete count by the Times Weekly, there were 128 investment events related to autonomous driving in 2022, compared to 144 in 2021; the cumulative disclosed amount was nearly RMB 20 billion, only about a quarter of the RMB 93.2 billion disclosed in 2021.

The intensified internal competition and white-hot market have sounded the alarm for WeRide regarding its commercialization loop. In the foreseeable future, the company's operating scale, performance growth, financial health, and technological development capabilities will all be subject to long-term scrutiny by the capital market.