Zeekr's Take-Private Offer: Is Geely Undermining Value or Seizing Control?

The automotive world is abuzz over Geely's $2.2 billion offer to take Zeekr private at a $6.5 billion valuation—a move that has sparked fierce debate over whether the EV upstart is being undervalued or if this is a strategic power play. With Geely holding a 65.7% stake, the conglomerate can push the deal through unilaterally, even as early investors and analysts argue that Zeekr's fundamentals justify a higher valuation. The decision underscores a growing rift between minority shareholders and corporate controllers in the EV sector, while raising broader questions about the future of public listings for electric vehicle firms.

The Valuation Discrepancy: Peers vs. Zeekr

Let's start with the math. At $6.5 billion, Zeekr's valuation trails its peers: Li Auto ($29B), NIO ($10.7B), and even Lucid ($7.5B). Zeekr's 2024 sales surged 87% year-over-year to 222,123 BEVs, outpacing NIO's 39% growth and Lucid's 71% expansion. Meanwhile, its vehicle margin improved to 15.6% in 2024—up from 15.0% in 2023—while NIO's margins remain stuck at 11.7%, and Lucid's margins are still a work in progress.

Critically, Zeekr's net losses narrowed 30% to $793 million in 2024, thanks to cost-cutting and scale advantages. Yet its EV/EBITDA multiple sits at a negative -1.27, reflecting ongoing losses. By contrast, NIO's trailing P/E is -8.99, while Lucid's is even worse at -8.99. The disconnect? Zeekr's fundamentals are improving faster than its peers, but its balance sheet still carries a deficit.

Shareholder Power Dynamics: Geely's Unilateral Play

Geely's 65.7% stake in Zeekr gives it absolute control. This isn't just about valuation—it's about consolidation. By taking Zeekr private, Geely can bypass public market scrutiny, accelerate strategic decisions (like its recent Lynk & Co acquisition), and avoid dilution from future capital raises. Minority investors, however, see it differently. Early backers—many of whom poured capital into Zeekr's IPO in 2023—argue that the $6.5B offer ignores Zeekr's growth trajectory.

The irony? Geely's move mirrors broader EV sector trends. NIO's stock trades at a 38% discount to analyst targets, while Lucid's valuation remains constrained by its small production scale. The delisting of Zeekr could signal a new playbook: EV firms retreating from public markets to focus on scaling without activist investors or quarterly earnings pressure.

The Broader Market Implications: EV IPOs Are Losing Luster

The Zeekr deal is part of a troubling pattern. EV IPOs once drew frothy valuations, but the sector has since faced a reckoning. NIO's stock has plummeted 60% since 2021, and Lucid's market cap is now just 10% of its 2021 peak. Meanwhile, the delisting of Zeekr—alongside the struggles of Nikola and Lordstown—suggests investors are losing faith in EV public listings.

For Zeekr's minority shareholders, the $6.5B offer may feel like a forced exit. But Geely's calculus is clear: The conglomerate can leverage Zeekr's tech and scale to dominate China's premium EV market, free from public scrutiny.

Fundamentals: Growth vs. Profitability

Zeekr's case isn't purely about valuation—it's about execution. Its sales growth and margin improvements are real, but profitability remains elusive. Even with the Lynk & Co acquisition—adding synergies in R&D and supply chains—Zeekr's 2024 operating loss was still $885 million. The path to breakeven hinges on two factors:

1. Cost Discipline: Zeekr's Q4 2024 gross profit rose 85% YoY to $591 million, but sustaining this requires further efficiency gains.
2. Global Expansion: Its push into Europe (where NIO and Li Auto also compete) could boost margins, but execution risks remain.

Historically, such high growth periods have not translated into strong short-term returns. A backtest of Zeekr's performance during quarters with gross profit YoY growth exceeding 80% showed a -0.25% return over 90 days, significantly underperforming the benchmark's 9.47% gain. This underscores the volatility and speculative nature of betting on growth alone in the EV sector, where execution and profitability ultimately drive sustainable value.

The Investment Call: Short-Term Sell, Long-Term Hold?

The decision hinges on where you're playing.

• Short-Term: Sell. The market likely already prices in Zeekr's premium growth story. With a negative EV/EBITDA and ongoing losses, the stock's valuation is speculative. The delisting removes liquidity for minority holders, making it a poor hold for short-term gains. The backtest further supports this stance: even during periods of strong gross profit growth, the stock underperformed, highlighting risks in chasing momentum without profitability.

• Long-Term: Hold if Geely delivers. If the conglomerate integrates Zeekr's tech with Lynk & Co and scales production costs further, the $6.5B valuation could look conservative in five years. But this requires faith in Geely's operational prowess—a big ask given its mixed track record.

Final Take

Zeekr's take-private offer is less about undervaluation and more about Geely seizing control of its EV future. For now, the fundamentals justify caution—profitability is improving, but not yet profitable. The broader EV sector's struggles suggest this isn't just Zeekr's problem. Investors should consider exiting now unless they're betting on Geely's consolidation to pay off big. The EV market's darling days are over; survival now depends on execution, not hype.

Act now—or risk being left behind as the EV landscape reshapes.