Boqii Holding's Structural Overhaul: A Bold Play to Unlock Value in China's Pet Economy

Boqii Holding Limited (NYSE American: BQ) has embarked on a dramatic restructuring of its capital structure, delisting its American Depositary Shares (ADSs) and implementing a 1-for-160 reverse stock split—a move designed to stabilize its NYSE listing and position itself for growth in China's booming pet economy. The decision, approved by shareholders on June 26, 2025, marks a pivotal shift toward direct ownership of its Class A ordinary shares, eliminating the ADR intermediation layer and aligning its structure with market standards. Here's why this could unlock significant value for investors.

The Reverse Split and ADR Termination: A Necessary Evil?

Boqii's extreme reverse split—consolidating 160 shares into 1—follows a January 2025 interim adjustment that shifted its ADS ratio from 1:15 to 1:150, effectively a 1-for-10 reverse split of the ADSs. These steps are clearly aimed at addressing the company's share price, which had fallen below thresholds required to maintain its NYSE listing. By reducing the number of outstanding shares, Boqii's stock price will rise proportionally, buying time to demonstrate its operational viability.

The termination of its ADR program removes a layer of complexity for investors, as holders will now own the underlying ordinary shares directly. While this transition may disorient short-term traders, it eliminates the risks tied to ADR liquidity constraints and depositary bank fees. For long-term investors, this simplifies ownership and aligns Boqii's structure with its peers trading in ordinary shares.

Liquidity and Costs: A Structural Advantage

The move to delist ADSs and shift to ordinary shares could enhance liquidity by attracting institutional investors who often avoid ADRs due to their lower trading volumes. shows that the January ratio adjustment temporarily boosted its share price, hinting at potential upside from structural changes. A direct listing may also reduce trading costs, as ordinary shares typically incur fewer fees than ADRs.

Moreover, the new CUSIP and transfer agent (VStock Transfer) signal a commitment to regulatory compliance and investor transparency. While fractional shares from the reverse split will be sold, the net result for shareholders is a more streamlined equity structure—a critical step toward attracting capital in a sector where operational execution matters more than technical barriers.

Strategic Shift to Direct Share Trading: Beyond Survival

Boqii's move is not just about avoiding delisting. By transitioning to ordinary shares, it positions itself to capitalize on China's $40 billion pet economy, which is growing at over 12% annually. As the operator of Boqii Mall, a leading online platform for pet products, and a producer of premium private labels (e.g., Yoken, Mocare), the company is well-placed to benefit from rising pet ownership and consumer spending on companion animals.

reveals that BQ trades at a steep discount to rivals like Pinduoduo's Pinduoduo Pet or YIpin Pet, despite its established platform and brand equity. This undervaluation creates a compelling entry point for investors willing to look past short-term volatility.

Risks and Considerations

The reverse split's extreme ratio raises eyebrows. Such moves often signal desperation, and there's no guarantee the stock will sustain a higher price post-reverse split. Additionally, Boqii's reliance on China's e-commerce landscape exposes it to regulatory risks and competition. However, the company's focus on private-label products—a higher-margin segment—mitigates some of these concerns.

The Investment Case: A Discounted Play on Growth

Boqii's structural overhaul is a calculated risk that prioritizes long-term viability over short-term volatility. The delisting of ADSs and reverse split are tactical moves to avoid penny stock status, but the real value lies in its position within a fast-growing sector. With China's pet ownership rate still below 20% (vs. 65% in the U.S.), there's ample room for expansion.

Investors should view BQ as a speculative but undervalued opportunity. A price target of $5-$7 (post-split) would reflect its growth potential, implying a 150-200% upside from current levels. The key catalysts are execution of the restructuring and continued market share gains in premium pet products.

Final Verdict: Buy the Structural Shift, Not the Split

Boqii's moves are about more than survival—they're about rebasing its equity structure to reflect its strategic strengths. While risks remain, the combination of a resilient pet economy and a streamlined capital structure positions BQ as a compelling contrarian play. Investors seeking exposure to China's consumer trends should consider a small position now, ahead of broader market recognition.

Boqii Holding Limited (BQ) is a high-risk, high-reward bet. Consult with a financial advisor before making investment decisions.