Chinese tech giant Huawei has made significant progress despite U.S. sanctions, and now talk of the company going public in 2024 is gaining ground, worrying Apple.
Huawei founder Ren Zhengfei previously rejected the idea of the company going public. However, discussions are reportedly underway for 2024, motivated by the idea thata public offering could be in China’s national interest by allowing Huawei to raise funds through share sales.
The recent success of Huawei, which notably escaped the fallout from US restrictions and is optimistic about its ability to regain lost ground in the smartphone market, has fueled considerations for an IPO in sotck exchange. Moreover, Huawei would not be the only one to consider an IPO, sinceHonor, which was sold in 2020, is also reportedly considering no longer being a private company.
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Huawei’s market capitalization could exceed that of Apple
Estimating Huawei’s potential value is speculative, but based on its 2022 earnings of $5.1 billion, applying a long-term earnings multiple similar to Apple’s (25x) could value Huawei at around $128 billion.
However, some industry experts, such as Ni Guangnan, former chief technology officer at Lenovo, suggested in 2019 that the true value of Huawei could reach $1.3 trillion, thus exceeding Apple’s market capitalization at the time. As a reminder, Apple was then “only” worth 1,000 billion dollars, and today peaks at almost 3,000 billion dollars.
The Chinese market has shown a great appetite for technology stocks, as evidenced by the successful IPO of SMIC (Semiconductor Manufacturing International Corporation). Although it was delisted from the New York Stock Exchange with a valuation below $6 billion in 2019, SMIC’s subsequent listing in Shanghai propelled its market capitalization to nearly $30 billion.
If Huawei goes public, it should attract strong interest from international investors eager to participate in China’s technological success. A possible Huawei IPO would mark not only an important financial step forward for the companye, but could also be interpreted as a victory over American sanctions. As a reminder, the company recently demonstrated its resilience in the face of sanctions by unveiling its flagship Mate 60 smartphone, which is equipped with a 5G chip. It now remains to be seen whether or not this feat will be enough to allow Huawei to achieve a higher market capitalization than Apple.