XIAO NOODLES (02408) saw its shares plummet by 5.12% during intraday trading on Monday, continuing its downward trend since its IPO. The stock has faced significant market skepticism, with its debut already marking a 27.84% drop from its issue price.
The decline reflects broader concerns about the company's business model and competitive pressures. Despite showing profitability in recent years, XIAO NOODLES operates in a highly competitive market with rising costs and thin margins. The company's strategy of prioritizing volume over margin has also raised questions among investors.
Adding to the pressure, cornerstone investors, including Hillhouse and Haidilao Singapore, are facing substantial floating losses. The market's reaction underscores the challenges faced by noodle chains in building brand loyalty and standardizing flavors, as investors grow wary of expansion-driven growth stories.
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