Is This Nasdaq Debutant A Buy After Sharp Sell-off On Day 2 Of Listing?

Is This Nasdaq Debutant A Buy After Sharp Sell-off On Day 2 Of Listing?

Benzinga
April 7, 2025

The machine vision company's shares tumbled on their second trading day last Friday, as it searches for a formula to jumpstart its stalling growth

Key Takeaways:

Lianhe Sowell's shares rose on their trading debut last Thursday, but tumbled the next day amid a broader market selloff on fears of a global trade war

The machine vision company's recent rapid revenue growth came to a sudden halt in its latest reporting period

Talk about bad timing.

Machine vision company Lianhe Sowell International Group Ltd. (LHSW.US) made its U.S. trading debut into some of the worst headwinds in years, launching its newly Nasdaq-listed stock last Thursday. The shares seemed to defy the tanking markets around it, briefly more than doubling from their IPO price of $4 before closing up by a respectable 7.3% at $4.29.

But then reality caught up with the company on its second trading day last Friday, as the broader market continued to tank on concerns about coming chaos from Donald Trump's newly announced tariffs on most U.S. trading partners. Lianhe Sowell's shares led that charge downward by plunging 32% their second day to end at $2.92.

It's no huge surprise that this company's stock has been so volatile, as it's quite small and its float was also small, equal to just 3.8% of its outstanding shares. What's more, Lianhe Sowell's' astonishing growth that may have impressed investors when it first filed to list in May last year suddenly stopped in the six months to last September, the first half of the company's fiscal year, according to its latest updated prospectus.

Lianhe Sowell's story looks both encouraging but also has factors that could limit its potential. Unlike other companies machine vision companies, which are largely reliant government customers, Lianhe Sowell sells its machines and software to other companies. That's an important difference, as governments across China are reining in their spending lately due to their large debt loads.

By comparison, the manufacturers that make up Lianhe Sowell's customer base ...

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