Miss Fresh or Daily Youxian is a Chinese grocery delivery e-commerce startup with a nearly $3 billion valuation. It has recently begun to lay off staff and leave suppliers unpaid since it ran out of money.
According to SCMP, Miss Fresh raised $273 million in a Nasdaq IPO last June at a valuation of $2.8 billion. In just over a year, the company’s shares had plummeted to only $0.14, about 1% of its debut price of $13, after announcing on Thursday that it would temporarily shut down its main business line of delivering fruit and vegetables.
The report noted that the company struggled in the first half of this year because of China’s zero-COVID approach.
The pandemic has lowered social retail and consumer spending. The quarantine requirements, lockdowns, and other control measures have seriously disrupted the company’s signature business offering, the 30-minute deliveries, which rely heavily on logistics.
In addition, since the start of the pandemic in 2020, the company also had to offer massive discounts to unfairly compete against other giants such as Meituan 美团, Pinduoduo, and Didi, leading to scrutiny from Chinese authorities.
As a result, the Tencent-backed delivery firm had to announce running out of cash after failing to receive 200 million yuan (30 million dollars) in equity investment from Shanxi Donghui, a Chinese multi-conglomerate in metal and energy.
The SCMP outlet also cited Miss Fresh’s online meeting record. At the gathering, the company declared about layoff decision due to financial distress.
All top managers, including its CEO and chief financial officer, have resigned, and they didn’t indicate precisely when the company would pay employees’ June and July salaries.
Moreover, Forbes reported that furious suppliers have protested outside Miss Fresh’s headquarters to demand overdue payments.
Zhang Yi 张译, a chief analyst at iiMedia Research Group, told the media that the delivery firm is facing a high risk of shutting down completely. He said, “A grocery-delivery startup needs to buy from suppliers daily. But as this crisis of confidence spreads, upstream suppliers will get increasingly worried and wouldn’t dare to sell to the firm.”
Forbes commented that this is why Miss Fresh ran out of products to sell for money.
According to China News, customers in Beijing, Shanghai, Tianjin, and other places couldn’t order products on the company’s app as usual.
The company notified users that it would change the half-hour delivery service to next-day delivery. But when customers order products on the app, it displays an out-of-stock. And the customer service staff were also unavailable even at regular working hours.
As reported by Forbes, Miss Fresh’s net loss in 2021 was $558 million. Data from its third-quarter results show the company’s current liabilities due within the next 12 months were $500 million, against cash and cash equivalents of $337 million.
According to the SEC, Miss Fresh no longer met Nasdaq’s listing requirements for having its shares traded below $1 for the last 30 consecutive business days. To stay in Nasdaq, the deadline for Miss Fresh is until the end of November.