JD-Backed Electronics Reseller Aihuishou Gains 23% in Nasdaq IPO

Shares of used electronics reseller Aihuishou surged 22.3% on the first day of trading, indicating investors’ confidence in China’s secondhand devices market.

Aihuishou’s initial public offering on Nasdaq raised $261 million (23 billion yuan) with shares closed Friday at $17.21 a piece, giving the JD.com-backed company a total valuation of roughly $3.8 billion.

The share increase is a promising sign for Aihuishou, especially because the US stock market has retreated recently and investors have fretted about volatility. The Nasdaq Composite fell 0.9% on Friday according to the Wall Street Journal.

Aihuishou, which means “love recycling” in Chinese, started recycling used computers, mobile phones and other consumer electronics online in 2011. The online reseller went offline two years later by opening bricks-and-mortar stores to inspect secondhand products and gain customer trust.

The company has opened up 755 stores and more than 1,500 self-service stations in 172 cities across China by the end of March, according to the prospectus. The total gross merchandise value for the platform was 22.8 billion yuan in 2020, a year in which the firm generated a total of 614 million yuan in revenue, representing a 204.5% year-on-year growth rate.

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Aihuishou’s rise has been part of rising demand for high quality secondhand electronics. According to the consulting firm CIC’s report, more than 90% of Chinese users prefer to buy used high-end brands compared with new models from low-end brands, as long as the quality is guaranteed.

The country’s “sinking market,” namely people living in small cities and rural areas generate a particularly strong demand for quality secondhand electronics. Aihuishou has reportedly joined forces with Kuaishou, which boasts 300 million daily active users in the sinking market, in order to gain exposure and boost sales.

Aihuishou also hopes to “let second-hand goods circulate around the world,” the company’s CEO Chen Xuefeng says. The overseas arm of the company, AHS Device, is expanding business in some of the world’s mainstream free trade markets such as Hong Kong, the United States, Japan and India.