Why did Seris suddenly plummet?

Why did Seris suddenly plummet?

The only way to restore market confidence is to prove to the world that it has the ability and determination to expand its corporate boundaries to the core area that supports its independent value.

On November 5, 2025, Sailis Motors listed on the Hong Kong stock market as the "first domestic A+H luxury new energy vehicle company", raising HKD 14 billion, becoming the largest IPO of a global car company in the Hong Kong stock market this year.

However, on the first day of listing, it encountered a "black opening."

The stock price opened low and fell by nearly 10% at one point, with a market value evaporating over HKD 20 billion.

Although the underwriters used "greenshoe funds" to protect the market and barely held the issue price, the stock price continued to fall the next day, officially falling below the issue price.

The A-share market has also been dragged down, with a cumulative market value shrinking by about 6.7 billion yuan in two days.

Although the Hong Kong stock offering price is more than 22% discount to A shares, institutional investors are still not optimistic. Only more than half of the shares originally planned for sale were sold, indicating a cautious attitude of large funds.

In stark contrast, retail investors subscribed to the market, with an oversubscription of 133 times and frozen funds exceeding 170 billion Hong Kong dollars. However, the market believes that this is more of a short-term speculation, and it is difficult to sustain the stock price.

Cyrus's anchor is wrong

The "opening black" of Sailis is a manifestation of the "market effectiveness theory" in the mature institutional market of Hong Kong stocks. The core contradiction lies in: There is an irreconcilable conflict between the company's valuation expectations based on past "story" and the valuation model based on future "risk discount" by institutional investors.

You know, the IPO price is not set at will, it needs an "anchor" to gain market recognition. Any company going public needs to set a price for its stock, which cannot be a castle in the air. It must find an "anchor" that can convince the market.

For companies like Sailis, which are already listed on the A-share market, the most direct and seemingly reasonable anchor point is its real-time stock price on the A-share market. The logic is simple: We already have a market-traded price in the A-share market, and the Hong Kong stock issue price is based on this, giving a "friendship discount". Isn't this a concession to Hong Kong stock investors?

The misconceptions are hidden here.

The underwriters of the company offered a discount of 22.7% compared to the closing price of the A-share market, which seems to be far higher than their peers, but they misjudged the market's judgment logic. Professional institutional investors, especially those experienced international funds in the Hong Kong stock market, do not care about "how much cheaper you are than A-shares." They only care about one question: "How much are you worth more than your intrinsic value?"

The "intrinsic value" here is a calculation based on the company's future cash flow discount, profitability, growth potential, and risk assessment.

The problem is that the A-share stock price of Seris itself may be a bubble that has been blown up under the multiple support of liquidity, retail investor enthusiasm, and the "Huawei concept". Using a price that may have a bubble as a benchmark and then discounting it, the result is still likely to be an inflated price that is far higher than the intrinsic value. This is like a 30% discount on the original price of a luxury item that is already overpriced. Smart buyers will calculate whether the materials, craftsmanship, and brand premium are really worth the discounted price, rather than being complacent about "taking a 30% discount."

In comparison, although CATL's Hong Kong stock issuance discount was small, its global leading position and rock-solid performance made it widely recognized by the market that its A-share price is solid and reliable. It is the best embodiment of intrinsic value, so it can be sought after without a significant discount.

The "discount anchoring" of Cyrus chose the wrong reference system from the beginning, causing its issue price to change from "concession" to a clear signal of "inflated" in the eyes of institutions.

When the pricing anchor of an IPO has deviated, the market's natural reaction leads to a financial phenomenon—the "winner curse." This is a very classic phenomenon in IPO research—in the case of information asymmetry, only investors who are least optimistic about the value of stocks (or least aware of risks) will actively subscribe, while more knowledgeable institutions will choose to avoid. Only 56% of the international placement was sold, which is a typical symptom of the "winner's curse." Smart institutions vote with their feet, indicating that they believe the risks are far greater than the benefits at this price. The hot subscription of retail investors at 133 times is more driven by the "myth" and marketing sentiment of A-shares. This kind of funds come and go quickly, and cannot provide stable price support.

When the most knowledgeable institutions exit one after another, and retail investors, mainly driven by emotions, become the main subscription force, the market has quietly planted the hidden danger of no one supporting the price after listing.

Therefore, the opening price of Sailisi fell below the issue price, and it fell deeply during the trading session, but it became normal instead. A "discount anchor" based on A-share stock prices that may have bubbles cannot pass the rigorous valuation scrutiny of institutional investors from the beginning; The resulting "winner's curse" effect has led the most rational funds to collectively exit the market, giving pricing power to emotionally driven short-term hot money. The combination of these two factors together forms the prelude to a perfect storm, and the ultimate result is the regretful dark line you see on the candlestick chart.

Valuation logic collapse

If the IPO pricing mistake was the trigger for the cold on the first day of the company, then the complete collapse of its valuation logic was the underlying factor that triggered the subsequent consecutive declines.

The valuation of a company in the capital market is not fixed. It will undergo fundamental and sometimes cruel "model shifts" as the company's life cycle evolves. For Cyrus, it is going through a painful process from a "story-driven" fantasy valuation to a "fundamental-driven" cold reality.

During the startup and concept explosion period of a company, the market follows a "story-driven" valuation method. At this stage, investors are dream buyers. They don't look at current profits, and even tolerate huge losses. What they value is the grand narrative about the future that the company tells: Disruptive technology, broad market share, unique ecological niche. The core investment logic is "trust leads to spirituality"—as long as the market believes that this story has the possibility of realization, it is willing to pay an astonishing premium for this "possibility". The honeymoon period of the cooperation between Sailis and Huawei is the biggest beneficiary of this valuation model.

The label "Huawei's only son" is an incredibly sexy capital story, which means top-notch technology empowerment, strong brand endorsement, and unlimited imagination. At that stage, the market was willing to temporarily ignore the weakness of Cyrus itself, tying it to Huawei as a disruptive force that was about to change the industry landscape, and giving it a valuation level comparable to that of a tech giant.

However, dreams always wake up.

When a company's revenue exceeds 100 billion yuan, when its products have been launched on a large scale, and when its cooperation model is no longer scarce, the patience of the capital market will be exhausted, and the valuation model will switch. At this point, the magic of "story-driven" will instantly fail, replaced by rational judgments driven by "fundamentals". The market demands one thing directly from the company: Real performance.

The core of valuation has shifted from the elusive "imaginative space" to solid hard indicators: Price-to-earnings ratio, discounted free cash flow, return on equity... Investors have now become strict accountants, and their questions are: "How much of the vast sea of stars you promised in the past have you fulfilled now?"

The biggest dilemma for Seris is that it is stuck in the fault between these two stages. Its revenue volume has entered a mature stage that requires "fundamental-driven" trials, but its performance is still in the early stage of needing "story-driven" to cover up. This misalignment of identity led to the complete collapse of its valuation system.

The first is the "speed-down": Revenue in the first three quarters of 2025 increased by only 3.7% year-on-year. For a new force car company that is still highly anticipated, this number is fatal. It is not a normal pullback in a high-growth cycle, but a clear and unmistakable signal that the company's products may have reached the market ceiling under the current model, and the story of explosive growth is no longer going on.

Secondly, there is "doubt about the quality of profitability." The net profit in the third quarter fell by 1.7% year-on-year, and this slight negative sign is like a loud alarm in the eyes of institutional investors. In the growth stage, when it is supposed to reduce costs and improve profit margins through economies of scale, profits have declined. Does this imply that the company has encountered difficult problems in cost control, supply chain management, or product gross margins?

When the phenomenon of "increasing revenue but not increasing profits" or even "regressing profits" appears, it corroborates the expression "extremely difficult to achieve the annual target," completely shaking investors' confidence in the company's management's execution and business model's profitability.

Finally, there is the issue of price-to-earnings ratio comparison. Based on the issue price, the forecast price-to-earnings ratio for Ceres in 2025 is as high as 26.5 times. This number appears extremely isolated and abrupt in the horizontal comparison. It is much higher than the average level of traditional Hong Kong car companies by 13.6 times, which can be explained by the difference between "new and old forces"; However, it is even significantly higher than the 20.8 times that of BYD, an industry giant that has established a complete industry chain advantage and strong brand power, and also higher than Ideal Auto, which has achieved stable profitability and is known for its self-developed technology.

At this moment, every rational institutional investor is conducting a simple soul-searching question: Why don't I choose to buy a BYD or Ideal with a more stable growth rate, deeper technological moat, and higher profit certainty, and pay a higher premium? How about gambling on a slowing growth, peaking profits, and controlling core technology in the hands of others?

This question has no answer. Because in a high-order financial valuation model, the value of a company is the discounted value of all its future free cash flows. When there are cracks in the growth story of Cyrus and the sustainability of profitability is questioned, the future "cash flow" expectations for it will be significantly lowered. At the same time, due to the huge uncertainty (i.e., increased risk) caused by the excessive reliance on Huawei cooperation model, the discount rate also needs to be increased accordingly. Between the decline and the rise, its theoretical "intrinsic value" is like a cliff-like decline. Institutional investors in the Hong Kong stock market have used this rigorous and cold model to complete the re-pricing of Cyrus.

Over-reliance on partners

From the perspective of enterprise strategy, Cyrus's problem perfectly confirms the idea of "Coase Theorem" in economics—the boundary of an enterprise is determined by the comparison of its internal transaction costs and external transaction costs.

The essence of Coase's theorem is that it defines the "boundary of the enterprise." For a company, what should be done by itself and what should be purchased from the external market, the criterion for this decision is to compare "internal transaction costs" and "external transaction costs." In simple terms, if the cost of completing an activity within the company is lower than the cost of negotiating, signing contracts, and supervising execution in the market, then the company should "internalize" this activity and become its core competence. Otherwise, it can be outsourced.

The cooperation model between Ceres and Huawei is also similar. Initially, this path was undoubtedly successful, even at the textbook level. For Sailis, independently developing intelligent cockpits, intelligent driving technology, and building a strong brand requires astronomical investment and a long research and development time, and its "internal transaction costs" are unattainable. Through cooperation with Huawei, it instantly gained top-notch technical solutions, a shining brand endorsement, and a mature sales network, which greatly "reduces external transaction costs." This is a shortcut to the market, allowing Ceres to launch competitive products in a short period of time, enjoying enviable early dividends.

However, this shortcut has taken too long, gradually blurring the boundaries of the enterprise itself. Seris has placed the most core "soul"—intelligent technology, brand image, and user touchpoints—on Huawei. When the cost of this long-term dependency external cooperation begins to appear and continues to rise, companies must re-examine their boundaries.

What are these costs? It is the loss of bargaining power, the substantial sharing of profits, the potential risk of technological supply interruption, and the strategic crisis of muscle atrophy and the loss of independent walking ability. When these accumulated external costs eventually exceed the internal costs required for independent research and development, the company falls into the "reliance trap." Clearly, Cyrus has not yet succeeded in crossing this trap, and it is still in the deep dependency stage.

The negative consequences of this dependence have been magnified at the capital market level. At the beginning, Sailis was the "only son of Huawei," and this uniqueness itself was the core reason why the capital market was willing to pay a high premium. However, when Huawei's smart car selection model came to fruition, Chery, Jianghuai, Changan, and others entered the market one after another. The "Huawei series" transformed from a carefully crafted "exclusive store" to a dazzling "brand department store". Sairis, from being the "legitimate son" of many stars, became one of the many "vassals". The decline in the sales rankings of the QJ series within Huawei is the most ruthless and direct evidence of this position change. When uniqueness no longer exists, the valuation aura attached to it naturally fades.

More importantly, the capital market has given vastly different valuation coefficients for the two models of "autonomous" and "dependence". We look at other new energy vehicle companies in the Hong Kong stock market, whether it is Ideal Auto's deep cultivation in the extended range path and product definition, Xiaopeng's continuous iteration in intelligent driving, or BYD's full industry chain layout from batteries to electronic control to complete vehicles. They all make it clear to investors: It has an independent, complete, and closed-loop R&D system and core technology. This "certainty" is the cornerstone of institutional funds. They mean that the company can survive and thrive on its own internal strength, regardless of how the external environment of cooperation changes.

On the other hand, the "certainty" of its business model has always been a huge question mark. Especially for large institutional investors, it is more concerned. What if Huawei adjusts its cooperation strategy in the future? What if the profit-sharing ratio becomes more stringent? What if Cyrus is unable to cultivate its own technical recognition? These uncertainties are translated into higher "risk discount" in the valuation model. In other words, for every dollar of profit that Cyrus may create in the future, investors believe it is more risky, so they are willing to buy it at a lower price. This explains why, at the same level of profitability, the market gives Cyrus a much lower price-to-earnings ratio than its competitors, which have shown greater autonomy.

Greenshoe mechanism triggering

At this time, the reason for the low opening of the first day of listing and the sharp drop of nearly 10% at one point was roughly clear. As a market stabilizer, CICC began to enter the market according to the rules, using "greenshoe funds" to buy stocks in an attempt to bring the stock price back above the issue price.

Good news? Maybe. But for more investors, it's time to mention the observation. The "greenshoe mechanism" is not a proof of a company's value, but a pre-set procedure that essentially provides an "insurance" for the issuer, allowing underwriters to buy in when the stock price breaks to stabilize the price. Its launch already indicates that without external intervention, this stock cannot even hold its basic issue price.

China International Capital Corporation's purchase of 2.2369 million shares is to fulfill its responsibility as a market stabilizer, but this part of the purchase is passive and planned, rather than an active investment based on value judgment. This artificial support can only be maintained for a while. Once the protection funds are used up, the stock price will eventually return to its proper level. The next day, the stock price of Sailisi continued to fall and officially broke, which is the best proof.

The Hong Kong stock market is a rational market where "no rabbits, no eagles." It is no longer paying a high premium for simple "Chinese stories" or "ecological concepts." When companies move from the "storytelling" stage to the "report card" stage, any slowdown in growth, fluctuations in profits, and flaws in models will be mercilessly amplified and priced by this highly effective market.

For Cyrus, the only way to stabilize the stock price in the short term is to deliver fourth-quarter results that far exceed market expectations, but this is extremely difficult. In the long run, I think its way out is nothing more than a few directions:

First, reshape the valuation logic: Clearly demonstrate to the market its independent core technology roadmap and timetable for de-Huawei (or at least reducing dependence).

Second, demonstrate the quality of profitability: It is not only necessary to restore profit growth, but also to demonstrate an increase in gross margins that do not rely on short-term subsidies and marketing, and stem from the strong competitiveness of the products themselves.

Third, explore the second growth curve: Breaking away from the absolute dependence on the Wenjie series proves its platform-based capabilities and the strength of incubating new popular models.

Shortcuts can allow you to take off quickly, but to continue to soar, you must have your own strong wings. The capital market is cruel, and it ultimately believes in companies that hold their destiny firmly in their own hands. The only way to restore market confidence is to prove to the world that it has the ability and determination to expand its corporate boundaries to the core area that supports its independent value. Otherwise, the "black opening" on the first day of listing may only be the starting point of its capital market value return.