Chagee IPO 2025: Chinese Tea Chain CHA Starts Trading on Nasdaq with 15% Climb

Chagee’s Successful Nasdaq Debut

The Chinese tea chain Chagee (Nasdaq: CHA) made a strong public market debut on Thursday, with shares climbing 15% during its first day of trading. The Chagee IPO represents a significant milestone for the rapidly growing tea retailer that has become a dominant force in the Asian beverage market since its founding in 2017.

Chagee shares opened at $33.75 per share on the Nasdaq exchange, showcasing strong initial investor confidence in the Chinese tea chain’s business model and growth prospects. While the stock initially soared as high as 49% above the IPO price in early trading, it settled to a more modest but still impressive 15% gain by the end of the session as trading activity normalized.

IPO Details: $411M Raised with $5B Valuation

The Chagee IPO was priced at $28 per share, at the upper limit of its expected range of $26 to $28, demonstrating strong demand from institutional investors despite recent market volatility. Through the offering, Chagee sold 14.7 million shares, successfully raising $411 million in capital that the company plans to use for international expansion, particularly into the lucrative US market.

With this successful public offering, Chagee achieved a valuation of approximately $5 billion, positioning it as one of the most valuable food and beverage chains to emerge from China in recent years. The significant valuation reflects investor confidence in Chagee’s established business model that has proven successful across multiple Asian markets.

Chagee Company Background and Growth

Since its founding in 2017 by CEO Junjie Zhang, Chagee has experienced remarkable growth, expanding to more than 6,400 teahouses across China, Malaysia, Singapore, and Thailand. This rapid expansion has established Chagee as one of the fastest-growing beverage chains in Asia, capitalizing on the region’s deep-rooted tea culture while innovating with modern flavors and store experiences.

Zhang created the tea chain after being inspired by the success of international coffee companies, particularly Starbucks, which counts China as its second-largest market. Rather than competing directly in the coffee space, Zhang identified an opportunity to elevate the traditional tea experience with a premium retail approach.

Financial performance validates Chagee’s business strategy, with the company generating impressive revenue of $1.7 billion last year, resulting in net income of $344.5 million according to regulatory filings. This represents a healthy profit margin of approximately 20%, demonstrating both top-line growth and operational efficiency.

US Expansion Plans Despite Trade Tensions

A key component of Chagee’s growth strategy involves international expansion, with the company preparing to open its first US location later this spring at the Westfield Century City mall in Los Angeles. This planned US launch comes at a challenging time for US-China business relations, as the company moves forward despite escalating trade tensions between Washington and Beijing.

The timing of Chagee’s US market entry adds an intriguing dimension to its growth strategy, as it coincides with President Donald Trump’s imposition of new tariffs that have ignited renewed trade friction with China. Unlike manufacturing businesses that might be directly affected by tariffs on physical goods, Chagee’s service-oriented business model may be somewhat insulated from direct tariff impacts.

However, broader economic implications of trade tensions could still affect consumer sentiment and the regulatory environment for Chinese businesses operating in the US. How American consumers respond to a Chinese tea chain amidst heightened geopolitical tensions remains to be seen.

Market Context: Chinese Companies on US Exchanges

Chagee’s successful IPO stands in contrast to recent trends regarding Chinese companies listing on US exchanges. From January 2023 to January 2024, the number of Chinese companies listed on the three largest US exchanges declined by 5%, according to the US-China Economic and Security Review Commission. This decline reflects increasing regulatory scrutiny from both US and Chinese authorities, as well as geopolitical tensions affecting investor sentiment.

The Chagee IPO also came during a period of market uncertainty, following several weeks of volatility after new tariffs sparked trade war concerns. Other IPO hopefuls, including payment provider Klarna and ticket marketplace StubHub, delayed their plans to go public after markets experienced significant drops in response to the trade tensions.

Future Outlook for Chagee (CHA)

Looking ahead, Chagee faces both significant opportunities and challenges as it seeks to build on its successful IPO. The capital raised will provide resources for its ambitious expansion plans, particularly in the US market where competition from established coffee chains and emerging tea retailers will be intense.

Investors will be closely watching several key metrics as Chagee begins life as a public company, including same-store sales growth in its Asian markets, consumer reception to its first US locations, and the company’s ability to maintain its impressive profit margins while investing in new market development.

The success of Chagee’s US launch will be particularly crucial, as it will demonstrate whether the company’s tea concept can successfully translate to Western markets where coffee has traditionally dominated the premium beverage retail landscape. Early performance of its Los Angeles location will provide important signals about the company’s potential for broader US expansion.

The Chagee IPO represents an important test case for Chinese consumer brands seeking to establish global footprints and access US capital markets. Whether the company can build on its strong IPO performance and successfully navigate the complexities of US-China relations will be closely watched by investors, competitors, and market observers alike in the coming months.