On Jun. 22, Full Truck Alliance (YMM) had a successful debut on the stock market. On its first day of trading on the NYSE, Full Truck Alliance stock climbed by double-digits after the company announced that it raised $1.6 billion in the offering. What’s the forecast for YMM stock in 2021? Will the stock rise more after the IPO?
Founded in 2017, Full Truck Alliance is China’s “Uber of trucks.” It runs a mobile app that connects truckers with shipping customers in China. The company is backed by high-profile investors, including SoftBank Group and Tencent Holdings.
Full Truck Alliance stock has a strong IPO
On Jun. 22, Full Truck Alliance started trading on the NYSE under the ticker symbol "YMM". The stock opened at $22.50—up 18.4 percent from its IPO price—and closed 13.2 percent higher, at $21.50. A total of 82.5 million American Depository Shares (ADSs) were offered in the IPO, at $19 each. Initially, Full Truck Alliance planned to offer the shares at $17–$19. One ADS represents 20 Class A ordinary shares.
Morgan Stanley, CICC, and Goldman Sachs are acting as lead underwriters for the offering. The underwriters have a 30-day option to buy an additional 12.4 million ADSs from Full Truck Alliance at the IPO price.
Will YMM stock rise more?
YMM stock was down 5 percent in premarket trading on Jun. 23. In the near term, the stock could see a sell-off as investors book profits. In 2020, Full Truck Alliance’s revenue rose by 4.8 percent year-over-year to $395.5 million. Meanwhile, the company's operating loss expanded to $554 million in 2020 from $155.8 million in 2019.
Full Truck Alliance’s stock forecast
The outlook for Full Truck Alliance stock looks promising. China’s road transportation market was estimated to be worth $951.5 billion in 2020. The transportation of full-truckload (FTL) and less-than-truckload (LTL) shipments accounts for the majority of China’s road transportation market.
Is YMM stock overvalued?
The Full Truck Alliance IPO valued the business at $20.8 billion, but that spiked to $24 billion after YMM stock surged on its debut. The stock is now trading at a 2020 price-to-sales multiple of 61x. Considering that U.S. trucking companies USA Truck and Old Dominion Freight Line have next-12-month EV-to-sales multiples of 0.5x and 5.8x, respectively, YMM stock looks overvalued.
YMM stock is a good long-term investment, but not at this price
Full Truck Alliance could continue to benefit from the surge in e-commerce and package delivery amid the COVID-19 pandemic. Approximately 1.4 million shippers posted orders on the Full Truck platform in Mar. 2021. YMM's institutional investors include Invesco, Fidelity, and Abu Dhabi-based Mubadala Investment.
YMM versus Uber
YMM offers a digital platform that connects truckers with commercial shippers in China, similar to how Uber connects drivers and ride-sharing customers. Full Truck platform covers 300 cities and around 100,000 routes in China.
Uber went public in 2019 at $45. Currently, the stock is up 9 percent from its IPO price. It has a market capitalization of $92.1 billion, and trades at a next-12-month EV-to-sales multiple of 5.4x.