Chagee, the prominent bubble tea franchise from China, has officially submitted paperwork for an initial public offering (IPO) in the United States, aiming to trade on the Nasdaq under the ticker symbol “CHA.” This move is accompanied by the company’s strategy to launch its inaugural U.S. store at the Westfield Century City Mall in Los Angeles this spring.

Company Background and Financial Performance

Since its inception in 2017, Chagee has expanded tremendously, boasting a footprint of over 6,400 teahouses across markets such as China, Malaysia, Singapore, and Thailand by the end of 2024. Notably, approximately 97% of these locations operate within China.

In 2024, the company reported a net income of $344.5 million derived from revenue totaling $1.7 billion.

Vision for Global Expansion

The founder and CEO, Junjie Zhang, established Chagee with the ambition to transform tea consumption, drawing inspiration from the achievements of global coffee brands. As noted in company statements, Chagee envisions serving tea aficionados in 100 countries, creating 300,000 job opportunities worldwide, and delivering an impressive 15 billion cups of freshly brewed tea annually.

Challenges of Going Public in the U.S.

If successful, Chagee’s listing on the Nasdaq will be significant, as only a reduced number of Chinese companies have pursued U.S. listings recently. Between January 2023 and January 2024, the count of Chinese entities listed on major U.S. exchanges decreased by 5%, according to the U.S.-China Economic and Security Review Commission.

The strained political relations between the U.S. and Beijing pose additional challenges, with increased scrutiny affecting the IPO aspirations of several Chinese firms. For instance, Shein is now directing its attention towards a planned IPO in London after facing hurdles for a U.S. listing.

Investor Sentiment and Market Context

Potential investors may approach Chagee with caution, especially after the high-profile debacle faced by Luckin Coffee, another rapidly scaling Chinese beverage chain. Luckin, which quickly surpassed Starbucks in terms of store count in China, faced severe challenges after admitting to inflated sales figures, leading to a Nasdaq delisting and subsequent bankruptcy proceedings. Despite its recovery and current standing as China’s top coffee retailer by sales, the fallout from the Luckin incident continues to reverberate in investor sentiment towards Chinese brands.