China-Based Pipemaker Huadi Craters 87% After Dizzying Rally

(Bloomberg) — A frenzied rally in the shares of a little-known Chinese pipemaker has evaporated in a massive plunge.

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Huadi International Group sinks as much as 89% on Monday for its biggest drop on record, putting it on pace to erase the massive 716% rally its shares saw last week amid volatile trading. The company announced on Monday an agreement to sell 1 million shares of stock to a pair of institutional investors at $25 per share, an 86% discount to Friday’s closing price.

The company erased last week’s rally on news of the offering, falling to as low as $22.60. Shares closed Friday at $180. The stock sale will raise the same amount of cash as Huadi’s January 2021 initial public offering. Univest Securities served as placement agent for Monday’s registered direct offering.

The Wenzhou, China-based company that makes stainless steel pipes and tubes went public in 2021 without much fanfare, raising $25 million in capital. Since then it had surged about 2,150% through Friday’s close to give it a market value of more than $2.3 billion. Monday’s plunge takes Huadi’s market cap to about $300 million.

Last week’s rally was punctuated by a jump on Thursday that more than tripled its value on a plan to enter the clean energy space. The company doesn’t have any coverage among Wall Street analysts, according to Bloomberg data.

China stocks listed in the US broadly rallied last week on optimism over reopening hopes and progress in the American audit inspection of firms. Huadi is not the only China or Hong Kong-based stock making a sharp move Monday.

GigaCloud Technology, a Hong Kong-based online marketplace provider, surged as much as 41% on Monday, with more than 11 million shares traded early in the session.

(Updates to add regular hours trading and information about stock offering.)