Photo/Shetuwang

Jan. 2 (NBD) -- Stocks of Babytree Group (HK:01761), an Alibaba-backed online parenting site, closed at 6.87 Hong Kong dollars (88 cents) on Monday, bouncing back above its initial public offering (IPO) price of 6.8 Hong Kong dollars (87 cents) after days of plunging.

As of the closing time on Wednesday, the stock price of Babytree was recorded at 6.60 Hong Kong dollars (84 cents), falling below the IPO price again.

Statistics showed more than 70 percent of the newly-listed stocks in Hong Kong had tumbled below the IPO price and the fall wiped over 7 trillion Hong Kong dollars (894 billion U.S. dollars) in market capitalization.

On the one hand, under such circumstance, the slump of Babytree's stock price seems inevitable. On the other hand, the financial results of the online parenting platform are indeed worrisome.

According to the prospectus of the company, the revenues for the first half of 2018 stood at 407.5 million yuan (59.50 million U.S. dollars), a year-over-year increase of 12.6 percent. 

However, Babytree still remained loss-making. The loss for the first half of 2018 was registered at 2.175 billion yuan (317.60 million U.S. dollars), showing a steep rise from losses of 388 million yuan (56.66 million U.S. dollars) for the same period of 2017.

Founded in 2007, Babytree's business covers parenting community, Internet tools, e-commerce, customer-to-maker business, health and other segments. A market report indicated the Chinese parenting platform is the largest and most active parenting community in China in terms of monthly active users (MAU) which reached 139 million on average in 2017. 

A titan as Babytree is in the maternal and baby industry, it still faces huge challenges for further growth.

According to data from the China E-commerce Research Center, China is the second largest consumer market for maternal and child products. The huge market has seen fierce competition with e-commerce behemoths such as Alibaba, JD.com and Suning.com, offline maternal and child product brands as well as cross-border e-commerce companies like Ymatou.com in the battlefield. It is rather hard for Babytree to keep its current leading position.

Furthermore, the company is also challenged by the problems related to its internal management and the monetization of contents via advertising.

But some industry insiders are buoyant about Babytree's future, believing that Alibaba's investment in Babytree signifies the parenting site's clear and complete business model in the maternal and baby sector as well as its large number of users with high level of customer stickiness. But industry insiders also pointed out that the priority for Babytree is to find ways to improve its business.

Email: wenqiao@nbd.com.cn