SINGAPORE - Ride-hailing and carpooling firm Ryde closed flat on its first day of trading on the New York Stock Exchange (NYSE), as it joined a growing number of Singapore companies listed in the United States.

After opening at US$4 on March 6, the counter fluctuated between that level and US$5, before settling unchanged, with around 2.7 million shares traded during regular hours. The shares were down 2.25 per cent after-hours as at 8pm New York time.

Ryde said in a statement on March 6 that proceeds from its initial public offering (IPO) in the US will boost its competitiveness and propel growth as it “ventures into new markets and invests in technological improvements”.

Founder and chief executive Terence Zou said: “The use of proceeds from our IPO will play a pivotal role in the expansion of Ryde’s services globally and disrupting the incumbents in the industry.”

He also described Ryde’s debut on the NYSE as a “historic achievement”, but added that the firm faced challenges and hurdles which have tested its “determination and resolve”.

IPO amid widening losses

Ryde’s debut in the US comes amid its cash burn and widening losses in recent years.

According to its IPO prospectus, the firm posted revenue of $8.8 million in 2022, primarily driven by its carpooling and ride-hailing services, which accounted for about three-quarters of its total revenue. The remaining revenue of about $2.2 million came from advertising and the firm’s Ryde+ membership.

But it registered widening losses of $1.24 million in 2021 and $4.96 million in 2022. It also incurred a loss of nearly $4 million for the six months ended June 2023.

The prospectus noted that its accounting firm raised “doubt about the company’s ability to continue as a going concern” as its working capital stood at negative $461,000 and its shareholders’ deficiency was close to $5 million as at the end of 2022.

A negative working capital and a shareholders’ deficiency mean that a company has more liabilities than assets. 

Prior to its listing, a Ryde spokesman told The Straits Times on March 6 that the firm decided to make its debut in the US instead of Singapore due to “greater global recognition, the visibility of US exchanges and higher liquidity”.

He declined to comment on the company’s profitability.

Maybank Securities’ vice-president of research Jarick Seet noted that Ryde’s IPO was unexpected due to its relatively small scale and the company’s losses. “My guess is that Ryde really needs the funding and is seeking to be more recognised globally,” he said.

Mr Nirgunan Tiruchelvam, head of consumer and Internet at investment advisory firm Aletheia Capital, offered a different perspective. He said while Ryde is a loss-making operation, it has managed to carve out a niche for itself in its carpooling business. He also noted that despite Ryde’s smaller market share, ride-hailing services remain in high demand in Singapore, so investors will eye its stock.

He added: “Cars are expensive in Singapore, so companies like Ryde which provide ride-hailing services should be able to turn profitable in the long run.”

Mixed performances for S’pore companies listed overseas via Spacs

Ryde’s IPO, which raised US$12 million (S$16 million), is small compared with its main competitor Grab.

Grab listed on the Nasdaq stock exchange in 2021 via a special purpose acquisition company (Spac) and raised US$4.5 billion in a deal worth US$40 billion – the largest IPO by a South-east Asian company in US history. Ryde had declined to comment on its valuation.

Spacs are shell companies formed to raise capital through an IPO with the intention of later acquiring or merging with an existing private company.

But unlike Grab, whose shares lost over a third of their value on debut day, Ryde’s share price has remained stable.

Another company which listed on the Nasdaq stock exchange via a Spac, Singapore financial products platform MoneyHero Group, saw its shares declining sharply on the day of its debut in October 2023.

Grab and MoneyHero have witnessed a retreat in their share prices since their debuts, with Grab’s shares dropping by 76.2 per cent and MoneyHero’s by 62.1 per cent.

But things are looking up for Grab, with the super app posting a US$11 million profit in the quarter ending December 2023, the first time the company logged a profitable quarter.

Mr Isaac Lim, market strategist at Moomoo Financial Singapore, said that in general, Spac listings are seen by some experts as a quick and easy way to circumvent the sometimes lengthy process of being listed via a conventional IPO.

But from a business perspective, Spac listings can be seen as “lazy” access to capital whereby the partner firms are not properly valued or generally overvalued just to generate buzz and gain investors’ attention, he noted.

“This way it would be hard for serious investors to know the true value and worth of the Spac listing. As such, it is only the early-stage investors that stand to gain, such as the owners of the Spacs and the founders of the partner firms,” he said.

“In the case of Ryde, its steady debut performance as compared to Grab could be due to investors having more confidence in Ryde’s business model as well as the lack of baggage typically associated with a Spac listing,” he added.

Singapore v the US

Companies in the Asia-Pacific, including Singapore, are increasingly looking to raise funds overseas, especially in the US, drawn by hopes of strong valuations, liquidity and proximity to their target markets.

Ohmyhome, a Singapore-based property transaction platform, listed on the Nasdaq stock exchange in March 2023. 

Home-grown Simpple, which provides an automated management tool for building maintenance, surveillance and cleaning, also chose to list on the Nasdaq in September 2023 as part of its global expansion plan.

Consumer Internet company Sea and property listing website PropertyGuru are also listed in the US. 

Mr Lim said that more Singapore companies are looking to list in the US market because it is a “behemoth”.

He said: “Being such a developed, mature and liquid market means that the US will naturally attract a lot of investors both domestically and globally.”

“Being listed in Singapore would make it tough for institutional investors to buy up the stock at an attractive price without moving the prices away from their fair value, given the much lower trading volume. This would be a completely different case in the US markets,” he added.

Aletheia Capital’s Mr Tiruchelvam, however, said listing at home has its advantages.

Singapore companies would fare better if they were listed on the Singapore Exchange simply because investors here would be more familiar with the companies’ business models.

“The man in the street here would be more familiar with these business – for example, someone in Singapore would know more about PropertyGuru than someone in Brooklyn, New York,” he said.