Misconceptions about US IPOs - Misconception 1: US IPOs guarantee higher valuations. The truth is that Chinese concept stocks often face valuation discounts of 20%-40% compared to US peers due to geopolitical factors, regulatory uncertainties, and cultural differences. Valuation is primarily driven by the company's fundamentals, profitability, industry outlook, and market sentiment, rather than the listing location itself [2][3]. - Misconception 2: US IPOs always secure more funding. The reality is that IPO financing amounts are determined by market supply and demand, and many Chinese concept stocks have raised less than expected in recent years, with most 2023 IPOs raising under $100 million. While US markets offer more flexible refinancing options, the initial fundraising capability is not guaranteed [3][4]. - Misconception 3: US listing requirements are significantly lower than those in A-shares or Hong Kong. Although the US may have more lenient profitability requirements (e.g., Nasdaq allows unprofitable companies to list), the information disclosure requirements are extremely stringent. Compliance costs can exceed expectations, and any misstep can lead to lawsuits or regulatory penalties [4][5]. - Misconception 4: Stocks listed in the US have inherently good liquidity. The US market is highly segmented, with popular Chinese concept stocks experiencing active trading, while many smaller stocks face liquidity challenges, including low average trading volumes and wide bid-ask spreads. Illiquid "zombie stocks" can severely restrict shareholder exits and future capital operations [5][6]. - Misconception 5: Chinese reports are sufficient; English communication is not a major issue. Proficiency in English is essential, as official disclosure documents must be in English, and all significant communications, including roadshows and earnings calls, require fluent English. Communication barriers can directly impact investor confidence and valuations [6][7]. - Misconception 6: Successful listing means minimal regulatory pressure. In reality, going public initiates a period of ongoing regulatory scrutiny, including strict SEC oversight, risks from short-sellers, complex litigation environments, and cross-border regulatory cooperation. Recent years have seen increased regulatory pressure on Chinese concept stocks, with delisting risks remaining a concern [7][9]. Essence of US IPOs - The essence of going public in the US is not the end goal but the beginning of integration into the global capital market. The core values include: - Connecting with international capital: Attracting global long-term funds and optimizing shareholder structure [9]. - Enhancing brand credibility: Strict regulatory oversight boosts international reputation [9]. - Improving corporate governance: Forces companies to establish international governance and compliance systems [9]. - Incentivizing talent mechanisms: The flexible equity incentives in US markets are more attractive [9]. Conclusion - Listing in the US is akin to embarking on a voyage; while it offers access to broader markets, it also presents challenges. Companies must navigate these complexities with a clear understanding of the potential pitfalls and make strategic decisions that align with their development goals [10].