EHang, a Self-flying Aircrafts Developer, Debuts on Nasdaq, Raising $40 Million

Shares in the Chinese autonomous air mobility company slid below its issue price in its debut day in New York.

Belinda Zhou
    Dec 12, 2019 9:00 AM  PT
EHang, a Self-flying Aircrafts Developer, Debuts on Nasdaq, Raising $40 Million
author: Belinda Zhou   

EHang Holdings Ltd. (Nasdaq: EH) lifted off in its initial public offering in New York on Thursday, raising $40 million by willing 3.2 million of its American depositary shares.

The Guangzhou-based company, which is developing autonomous aircrafts, priced its shares at $12.50, the low end of the expected range.

The stock in EHang opened at $12.55 per share, then slid nearly 3% by midday, to $12.18.

"I did not expect this day to come so fast, I am very happy. I have been thinking that we should make the best of autonomous drones, and many people have determined and themed such a dream with me," Huazhi Hu, EHang's chief executive officer and co-founder, said on IPO day at the Nasdaq marketsite.

The company has downsized its IPO offering from $100 million it targeted in its initial prospectus in October.

Established in 2014, EHang develops, markets and sells autonomous aerial vehicles (AAVs), with a mission to "make safe, autonomous and eco-friendly air mobility accessible to everyone," according to its prospectus. It aims to deliver technology for passenger transportation, logistics, smart cities and aerial media, among other uses.

EHang is said to be in the very early stage in its commercialization efforts, said CW columnist Donovan Jones, creator of VentureDeal. He said the company faces large, entrenched competitors in the nascent AAV space in his analysis of the drone developer.

"Management will need to be nimble in pursuing sales in countries or regions that provide favorable regulatory policies to encourage continued testing and use cases for this nascent technology," Jones wrote.

The company reported revenue of $9.4 million for the nine months through September, up 20% year-over-year. Net loss narrowed 4% from a year ago to $6.7 million, the company said. For the full year 2018, EHang posted $9.3 million in revenue on $11.3 million in losses.

EHang said in its filings that it intends to use the proceeds of its IPO to expand its production capacity, to boost research and development and for general corporate purposes, including working capital and investments.

The company's partners include DHL-Sinotrans, Vodafone GmbH and FACC. Investors in EHang included ZhenFund, PreAngel, OFC, Microsoft Accelerator Beijing, LeBox Capital, GP Capital, GGV Capital, and Nick Yang. 

Underwriters on the deal are Morgan Stanley & Co. LLC, Needham & Company LLC, Tiger Brokers (NZ) Ltd. and Prime Number Capital LLC. Credit Suisse Securities (USA) LLC was no longer listed as an underwriter.