Chinese tech giant LeEco total valuation drops $145 mn, investors worried

On Tuesday, as rumours of layoffs at Chinese tech giant LeEco spread, investors once again hit the dislike button. By market close, the stock had dropped nearly eight percent, shedding about $0.45 of per share value in a single day. The company, which is listed on the Shenzhen Stock Exchange, ended the day at $5.21 per share. The drop caused LeEco’s total valuation to shed $145 million.

Any company is bound to have a rough day in the markets with rumours of layoffs flying, but LeEco’s Tuesday number is just the latest drop in what’s looking more and more like a long-term trend. Over the summer, its per-share value nearly reached $8, and at the beginning of November, the value was still well above $6. But then came news of a serious cash crunch. And although later in the month the company announced a new $600 million round, that clearly wasn’t enough to assuage investors’ concerns.

The drop isn’t likely to continue today, but nor is it likely that shares will soar back up and regain the value that was lost on Tuesday.

The worst case scenario for LeEco is that on a broad scale investors are beginning to lose faith in the company. Having just moved into the US and with an ambitious self-driving car project still far down the pipeline, LeEco has plenty of avenues for future growth, but it’s unlikely to be able to realise its aspirations – especially in the self-driving car market – without continued access to outside capital.