Tencent-Backed Enflame Surges 179% in Shanghai Debut, Makes Two Founders Billionaires Despite No Profit

Shanghai Enflame Technology went public on the STAR Market Friday and investors treated it like a lottery ticket.

The stock priced at 142.18 yuan a share, opened at 410 yuan, and hit an intraday high of 475 yuan, a gain of 234%, according to the South China Morning Post. It settled to close at 397 yuan, up roughly 179%, matching figures reported by SCMP and KSL News. Yahoo Finance and Bitcoin Ethereum News also put the closing gain near 180%. CNBC's reported 206% figure appears to reflect an earlier point in the session before the stock pared its gains into the close.

At closing price, Enflame's market value hit about 171 billion yuan, roughly $25.5 billion, according to SCMP. That's nearly triple the 61.2 billion yuan valuation set by the IPO price, per KSL News.

Demand going in was absurd. Startup Fortune reported, citing Reuters, that retail investors placed orders worth 6,109 times the shares available in the online portion of the offering, with Bloomberg calculating a slightly lower figure of 4,073 times after Enflame shifted extra shares into retail. CNBC put it at over 6,000 times. Only 17.9 million shares, about 4.16% of the post-IPO stock, were actually free to trade at the open, according to Startup Fortune. A float that small moves fast when demand is that lopsided.

Two New Billionaires, One Money-Losing Company

Chairman Zhao Lidong, 60, and CEO Zhang Yalin, 48, both crossed into billionaire territory Friday. Forbes estimates cited by Yahoo Finance put each man's fortune at $2.1 billion based on their stakes. The Business Times reported a higher figure, $2.5 billion each. Either way, both founders remain under lockup periods and must hit specific targets before they can sell, according to the Business Times.

Zhao is a U.S. citizen who spent two decades in Silicon Valley and later served as a vice president at state-backed Tsinghua Unigroup, per the Business Times. Zhang, a Chinese national, previously led AMD's core chip development in Shanghai and worked on custom chips for Microsoft's Xbox One, according to Yahoo Finance. Both men worked together at AMD before founding Enflame in 2018.

The company itself is nowhere near profitable. Enflame's 2025 revenue came in at 990.2 million yuan, up 37% to 40% from 722 million yuan the year before, per CNBC and KSL News. Its net loss narrowed to 1.16 billion yuan from 1.51 billion yuan the prior year, KSL News reported. The Business Times noted Enflame has fewer than 900 employees and has never turned a profit since its 2018 founding.

Tencent is both Enflame's largest shareholder and its largest customer, a dual role that concentrates risk. KSL News reported Tencent holds a 17.95% post-IPO stake and generated 83.79% of Enflame's 2025 revenue. SCMP put Tencent's pre-IPO stake near 20%, with the value of that position jumping to nearly 35 billion yuan after Friday's rally.

Enflame is forecasting revenue of 2.3 billion to 3 billion yuan for the first nine months of 2026, alongside a projected net loss of 700 million to 860 million yuan, and says it expects to break even or turn profitable sometime in 2026 or 2027, according to its prospectus as cited by KSL News.

The Skeptic's Case

Not everyone thinks this rally reflects the company's actual prospects. Shen Meng, managing director at Beijing-based Chanson & Co, told Reuters (as carried by KSL News and Yahoo Finance) that the surge is "driven by short-term incentives for new share subscriptions rather than investors' focus on the long-term fundamental development of the sector." He added that funds are chasing new-listing pops, not betting on the company's actual potential.

Enflame's three peers in China's so-called "four little GPU dragons" — Moore Threads, MetaX, and Biren Technology — all posted massive first-day pops and have since fallen from those post-debut peaks, according to the Business Times and Startup Fortune. Moore Threads jumped 425% on its December 2025 debut; MetaX rose nearly 700%; Biren gained 76% on its Hong Kong listing in January. All three remain unprofitable.

The bull case is straightforward: Nvidia's data-center chip sales in China have been throttled by U.S. export controls, and Beijing has shown little appetite for importing advanced foreign chips anyway, according to CNBC, citing IDC data in Enflame's own prospectus. Nvidia-affiliated chips still made up nearly 60% of China's AI accelerator market in 2025. Goldman Sachs projected in an August report that China's semiconductor capital spending will reach $82 billion by 2030 as domestic AI infrastructure expands.

The key question is whether that market opportunity translates into Enflame actually making money. The company's own forecast still shows losses through at least the third quarter of 2026.