Should You Buy Zeekr (ZK) Stock After Its IPO?


  • Premium EV brand Zeekr (ZK) got off to a powerful market debut.
  • Being a Geely (GELYY) spinoff may help move the needle for ZK stock.
  • Sector-wide challenges still cloud EV-related investments.
ZK stock - Should You Buy Zeekr (ZK) Stock After Its IPO?

Source: Robert Way /

China-based premium-label electric vehicle (EV) manufacturer Zeekr (NYSE:ZK) got off to a strong debut on Friday, ironically amid the Biden administration’s plans to raise tariffs on Chinese vehicle imports to the U.S., according to Reuters. The dichotomy reflects the double-forked nature of ZK stock.

As InvestorPlace contributor Dana Blankenhorn explained, Zeekr represents a spinoff from Geely (OTCMKTS:GELYY). It’s the second such entity to be traded in U.S. exchanges, following Polestar (NASDAQ:PSNY), a spinoff from Geely-controlled automotive brand Volvo (OTCMKTS:VLVLY).

Through its multiple brands, Geely essentially occupies the entire pricing spectrum. “This includes the Panda line of mini-EVs priced from $5,500 to $7,500. It also includes the Galaxy E5, which competes with the Volkswagen (OTCMKTS:VWAGY) ID.4,” Blankenhorn writes.

Perhaps most notably, Zeekr is competing directly with Tesla (NASDAQ:TSLA) with the Zeekr 001, a wagon-shaped crossover that may take market share from customers seeking European-style luxury vehicles.

Perhaps not surprisingly, given the robust product portfolio, ZK stock soared following its initial public offering. Earlier Friday, management stated that it raised $441 million due to an upsized IPO of 21 million American depositary shares priced at $21 each. Previously, Zeekr expected to price its offering between $18 and $21 per share.

Impressive Launch of ZK Stock Clashes With Industry Realities

To be sure, the powerful pop in ZK stock offers encouragement for two key reasons. Number one, the debut reflects strong and possibly sustainable sentiment for IPOs. If so, that would be a huge boost for private enterprises and their backers planning their own public launches.

Number two, ZK stock gave a much-needed shot in the arm for the beleaguered EV sector. From sector leader Tesla to upstart Lucid Group (NASDAQ:LCID), the pure-play EV sector has suffered badly. Much of that stems from Tesla’s price war. However, the demand fallout also reflects severe consumer concerns, particularly inflation and elevated borrowing costs.

However, the problem is that the debut of ZK stock might not change the broader narrative. If anything, it might make circumstances more perplexing.

On the positive front, Zeekr’s directive to target Tesla is spot on. For instance, Tesla canceled its long-promised effort to develop a low-cost vehicle due in part to fierce Chinese competition. The news implies that China-based brands are resonating with customers.

However, on the not-so-pleasant front, Chinese EV manufacturers have also struggled for traction. Thus, success could hinge on which enterprise wins a war of attrition.

Should You Buy Zeekr Stock?

While ZK stock certainly enjoyed a blistering debut, acquiring shares after the IPO presents a risky move. Along with the tough rivalry among pure-play EV manufacturers, legacy automakers are flexing their muscles with some success. Therefore, ZK may be best treated as a speculative opportunity.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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