5,500x Oversubscribed: China’s Robot Mania Has Officially Arrived

There are bubbles

There are manias.

And then there’s an IPO that gets 5,500 times oversubscribed.

That’s what just happened with Chinese humanoid robot maker Unitree Robotics.

Retail investors have been falling over themselves to get a piece of the company ahead of its Shanghai listing.

And when you see numbers like these, you should pay attention.

Not necessarily because you should buy the stock.

Quite the opposite.

Because Unitree may be telling us something much bigger about where the next speculative investment boom is heading.

Founded by Wang Xingxing in 2016, Unitree has become one of China’s most recognizable robotics companies.

You may have already seen its machines.

They dance. They flip. They box.

But behind the viral videos is a serious business.

Unitree shipped 5,500 humanoid robots last year, according to the Financial Times article supplied for this piece.

Now investors are putting a very serious price on its future.

Unitree allotted roughly 40.4 million shares at Rmb150.8 each, raising approximately Rmb6.1 billion — about $904 million.

That gives the company a valuation of roughly $9 billion.

Retail demand was so extraordinary that the retail portion of the IPO ended up more than 5,500 times oversubscribed.

For perspective, Chinese chipmaker ChangXin Memory Technologies (CXMT) attracted enormous attention during its own blockbuster IPO.

That offering was reportedly oversubscribed more than 200 times.

Unitree just blew past it.

Here’s where things get interesting.

Based on last year’s results, Unitree is coming to market at approximately:

219 times earnings.

And nearly:

36 times sales.

Those are extraordinary multiples.

Perhaps Unitree eventually grows into them.

Humanoid robotics could become an enormous industry.

But when investors are willing to pay 219 times historical earnings while simultaneously fighting over a tiny allocation of shares, I start asking a different question.

Where else is the money going to flow?

Because history suggests that when investors become obsessed with a new technological revolution, the obvious winner isn’t always the best investment.

Sometimes the real fortunes are made one or two steps removed from the headlines.

For the past several years, artificial intelligence has largely lived inside computers.

Chatbots.

Data centers.

Image generators.

Software.

Humanoid robotics changes that.

This is what investors increasingly call “embodied AI” — artificial intelligence that can perceive and interact with the physical world.

Think about what that could mean.

Factories operating around the clock.

Warehouses staffed partly by robots.

Robots performing dangerous industrial jobs.

Machines assisting elderly people.

Eventually, perhaps, general-purpose robots working inside homes.

The potential market is enormous.

And China clearly intends to compete for it.

That puts Unitree on the front line of another technological contest between China and the United States.

There’s already evidence of where this could be heading.

According to the supplied article, the US Federal Communications Commission recently banned imports of humanoid robots in a move widely viewed as targeting Chinese products.

That matters to Unitree.

More than 40% of its revenue comes from overseas markets, while the US has represented roughly 13%-18% depending on the year.

Unitree says its existing main products can continue to be sold in America, while acknowledging that new models face the risk of being shut out.

In other words, investors aren’t merely betting on robots.

They’re betting on robots in the middle of an escalating US-China technology rivalry.

And they’re paying 219 times earnings for the privilege.

That doesn’t make me bearish on robotics.

It makes me interested in what comes next.

Think back to the AI boom.

One of its greatest stock market winners wasn’t the company with the most popular chatbot.

It was the company selling the hardware everyone needed to build AI infrastructure:

Nvidia (NASDAQ: NVDA).

That’s the question I’m asking about humanoid robotics today.

Who sells the picks and shovels?

A humanoid robot requires an enormous ecosystem.

Semiconductors.

Sensors.

Cameras.

Motors.

Actuators.

Precision gearboxes.

Bearings.

Batteries.

Power electronics.

Machine vision.

Simulation software.

Every successful humanoid manufacturer will need some combination of these technologies.

And that could produce a much more interesting investment opportunity than chasing an IPO after retail investors have already bid demand to 5,500 times supply.

This is particularly interesting at the small-cap end of the market.

Suppose a $200 billion company develops a robotics division that eventually generates $1 billion in annual sales.

Nice business.

But it probably won’t transform the stock.

Now imagine a specialized component manufacturer worth $300 million wins contracts across several leading robot platforms.

Suddenly robotics moves from an interesting side business to something capable of transforming the company’s earnings.

That’s the setup I’m interested in.

I want companies where the existing business provides some foundation for the valuation...

...but where explosive growth in humanoid robotics creates potentially enormous upside.

That is genuine optionality.

And it’s exactly where small-cap investors have an advantage.

Unitree’s IPO has all the ingredients of a classic speculative frenzy.

A futuristic technology.

A charismatic founder.

Viral products.

A huge potential market.

And investors desperate to get involved.

At 5,500 times oversubscribed, nobody can claim Unitree is undiscovered.

But that’s precisely why I’m paying attention.

Not because I want to chase the hottest robot stock in China.

Because when this much capital starts chasing a new investment theme, opportunities tend to emerge throughout the ecosystem.

Unitree may become the great Chinese robotics champion.

Or another company may eventually take the crown.

I don’t know.

But I suspect the biggest investment surprise of the humanoid robotics boom could come from a company most investors haven’t heard of yet.

The company selling something every robot will need.

That’s where I’m looking next.