Assessing WeRide (NasdaqGM:WRD) Valuation as Robotaxi Pioneer Lists Shares in Hong Kong and US Markets

WeRide (NasdaqGM:WRD) just completed its primary listing on the Hong Kong Stock Exchange, becoming the first robotaxi company to trade on both US and Hong Kong markets. This dual listing represents a strategic step intended to broaden its global investor base.

See our latest analysis for WeRide.

Momentum has been shaky for WeRide this year, with a 1-year total shareholder return of -48.45% and the share price down 43.7% year-to-date. This comes despite headline-making expansion moves and oversubscribed share offerings in both Hong Kong and the Middle East. The short-term picture remains volatile, but recent high-profile deals and global regulatory wins suggest the market is still calibrating risk and growth expectations for this ambitious robotaxi trailblazer.

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With shares down sharply over the past year despite recent licensing wins and blockbuster partnerships, the key question now is whether the current valuation underestimates WeRide's long-term potential or if future growth is already reflected in the price.

Price-to-Sales Ratio of 47.4x: Is it justified?

WeRide's shares trade at a lofty price-to-sales ratio of 47.4x, far above both its direct peers and the broader auto components industry, despite recent price declines. This sharp premium stands out as a signal the market may be pricing in extraordinary growth or future profitability that has yet to materialize.

The price-to-sales ratio measures how much investors are willing to pay for each dollar of revenue a company generates. For early-stage, unprofitable innovators like WeRide, this metric acts as a rough barometer of growth expectations and market optimism, especially when earnings are negative and traditional measures like price-to-earnings do not apply.

The implication here is hard to ignore. Even by the standards of ambitious tech peers, WeRide's multiple is sky-high, over 67 times higher than the US auto components industry average of just 0.7x. While some may point to the company's rapid revenue growth as justification, the gap is dramatic. Compared to the estimated fair price-to-sales ratio of 49.5x, WeRide's current multiple is actually in line with fair value on a forward-looking basis, but only if bullish growth projections are realized.

Explore the SWS fair ratio for WeRide

Result: Price-to-Sales Ratio of 47.4x (ABOUT RIGHT)

However, continued losses and steep revenue multiples raise questions about whether WeRide can deliver on the sky-high growth that the market currently expects.

Find out about the key risks to this WeRide narrative.

Build Your Own WeRide Narrative

Keep in mind, if you have a different perspective or want to dig into the numbers yourself, crafting your own take on WeRide only takes a few minutes. Do it your way.

A great starting point for your WeRide research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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