The halo of US$3.5 billion valuation fades: The technological narrative gap behind Dasouche’s US stock plunge
Dasouche (DSC), which once boasted a valuation of US$3.5 billion, suffered a sharp decline in its share price after its listing on the US stock market. When the technological narrative of "AI infrastructure" is intertwined with low-margin offline transaction services and compliance scrutiny left over from historical business adjustments, the market is re-evaluating the business model of this used car unicorn. The gap between the gorgeous narrative and the feedback from the secondary market For Yao Junhong, the founder and chairman of Dasouche, and the many investment institutions behind him, the listing bell that has been waiting for many years has not brought the expected capital feast.
Dasouche (DSC), which once boasted a valuation of US$3.5 billion, suffered a sharp decline in its share price after its listing on the US stock market. When the technological narrative of "AI infrastructure" is intertwined with low-margin offline transaction services and compliance scrutiny left over from historical business adjustments, the market is re-evaluating the business model of this used car unicorn. The gap between gorgeous narratives and secondary market feedback For Yao Junhong, the founder and chairman of Dasouche, and the many investment institutions behind him, the listing bell that has been waiting for many years has not brought the expected capital feast. Dasouche’s issue price in this U.S. IPO was set at $17, but its stock price suffered a heavy hit after the opening. Judging from the market performance on the first day of listing, the stock price dropped rapidly after rising, with a drop of 46.71% on the first day. As of the close of trading on July 16, 2026 (the following stock price and market value data are as of this date), its stock price has fallen to US$5.27, a cumulative drop of 69% from the issue price, and the latest market value is only US$264 million. Choice data shows that Dasouche's stock price has continued to fluctuate at low levels recently and has not rebounded strongly after short-term abnormal fluctuations. This shows that the secondary market is in the stage of re-searching for a valuation anchor after IPO pricing. Dasouche Daily K Line (Source: Choice Data) This stock price performance directly led to a significant reduction in its market valuation. When it completed Series F financing in 2018, Dasouche's valuation once reached a peak of US$3.5 billion. The current market value of US$264 million means that its public market valuation has dropped by more than 90% from its financing peak in 2018. What is even more striking is that about 60% of the total amount of US$51 million raised in this IPO was subscribed by the old shareholder Ant Group, and the scale of new funds truly coming from public market investors is very limited. Behind this capital test is the exit return test faced by early supporters who have been with the company for nearly ten years. Since the completion of the last round of public financing in 2018, Dasouche has not received a large injection of additional new funds for eight years. During this period, the U.S. stock market’s valuation system for Chinese automotive stocks has been profoundly reshaped. When Dasouche faced the current secondary market pricing with the valuation expectations established during the boom period in 2018, the huge re-pricing pressure not only caused Wuyuan Capital, Primavera Capital, Warburg Pincus and other high-level institutions to face strict consideration of exit returns, but also caused the market to raise a series of core questions about the sustainability of its underlying profit model. The digital paradox of “high concentration” and “difficulty in monetization” In the prospectus, Dasouche drew a picture of its business territory with strong coverage in the industry. Data from CIC Consulting shows that Dasouche’s digital solutions cover China’s huge second-hand car dealer group, and its market share exceeds 90% in the national second-hand car dealer operating system market. Dasouche even emphasized in its prospectus that this share is 22 times larger than the combined number of the second and third players in the market. This highly concentrated market coverage is confirmed by customer stickiness data. As of December 2025, 66 of the top 100 used car dealers ranked by the China Automobile Dealers Association have been using its "Big Windmill" system for more than five consecutive years, and 93 have been using it for more than two years. However, such high industry penetration has not translated into equivalent financial returns. Data from the prospectus show that the revenue from the "digital solutions" segment, which is the core of its technological garb, has shown a continuous decline in recent years. The revenue of this segment has shrunk significantly from 140 million yuan in 2023 to 92.98 million yuan in 2024. By 2025, there will be only 74.52 million yuan left, showing a significant regression within two years. In 2025, digital solution revenue will account for only about 15% of the company's total revenue. High coverage cannot be translated into high unit price per passenger, and the root cause lies in the extremely fragile survival status of downstream car dealers.
Currently, the loss ratio of domestic second-hand car dealers has climbed to 73.6%, and the average profit of a single transaction is only about 1,500 yuan. For Dasouche, car dealers are not only paying customers of digital tools, but also the business source of transaction services. When the profit margins of downstream operating entities narrow, the first thing they compress is often non-core service expenditures. With their own living space being severely squeezed, small and medium-sized car dealers have very limited willingness and ability to pay for such digital tools. This cold winter in the industry chain is directly transmitted to Dasouche’s income structure. Due to the obstruction of software monetization, Souche has to rely on the other 85% of its revenue source - transaction services with low gross profit margin. In essence, the company is still earning revenue from heavy offline services such as testing and logistics, which has also caused its overall gross profit to continue to decline from 306 million yuan in 2023 to 260 million yuan in 2025. The story of “AI infrastructure” tortured by R&D data In order to obtain a higher price-to-sales valuation in the U.S. stock market, Dasouche told a technologically-rich story in its prospectus, positioning itself as “China’s No. 1 second-hand car AI application infrastructure stock.” The company emphasized that it has deeply embedded AI applications into the system of its flagship product "Dafengche" in an attempt to reshape the used car industry chain. However, this very forward-looking technological narrative seems somewhat lacking in confidence in the face of the company's R&D investment bill. Data from the prospectus show that from 2023 to 2025, Dasouche’s research and development expenses will be 85.6 million yuan, 100 million yuan and 84.66 million yuan respectively. Not only did R&D investment in 2025 not increase, but it was lower than the level in 2023. Compared with the high R&D investment characteristics of technology-based SaaS companies that are generally recognized by the market, the scale of Dasouche's R&D investment is still limited. The mismatch between core technology indicators and financial data makes the market naturally re-evaluate the quality of its technology. While investment in technology research and development is limited, the commercialization of AI technology in the non-standard field of used cars is also facing great objective restrictions. The second-hand car market has a strong "one car, one condition" attribute. Although AI is relatively mature in the pricing and appearance identification of conventional models, its accuracy still has flaws when it comes to hidden vehicle conditions such as water damage, hidden diseases, and meter adjustments. The judgment error is even greater for older vehicles and modified vehicles. It is generally believed in the industry that AI-assisted decision-making for conventional vehicles still needs to be continuously optimized, while automated decision-making capabilities covering complex vehicle conditions still face a long research and development cycle. At a stage when this technical barrier has not yet been fully transformed into a moat, it is obviously difficult to maintain the confidence of secondary market investors with a high-premium technology narrative to carry a business that is highly dependent on offline and has meager profits. Fund Balancing Techniques in the Pains of Business Shift If the gap in technological narratives affects the imagination of valuations, then fundamental data directly lowers the lower limit of asset pricing. Dasouche’s prospectus completely revealed its financial cards to the market. From 2023 to 2025, Dasouche's total revenue was 909 million yuan, 948 million yuan and 677 million yuan respectively, of which the total revenue in 2025 dropped significantly by 28.6% year-on-year. Although the company explained that this was mainly due to the initiative to divest B2B financial product referral services at the end of 2024, this move objectively caused the financial performance of business contraction, and also exposed the reality of weak growth in its main business after losing financial business support. Corresponding to the fluctuations in revenue, Dasouche is in a long-term state of consolidated net losses. The company's consolidated net losses in the past three years were 187 million yuan, 157 million yuan, and 94.56 million yuan respectively. A more severe test comes from the tight balance of the capital chain. Dasouche's operating cash flow has been in a state of net outflow for three consecutive years. From 2023 to 2025, the operating cash flow will have a net outflow of 163 million yuan, 213 million yuan and 90.37 million yuan respectively. Continuous cash losses are eroding the company's book capital. Its cash, cash equivalents and restricted cash held at the end of the year have shrunk from 302 million yuan at the end of 2023 to 180 million yuan at the end of 2025, a shrinkage of 40.3%.
In order to maintain normal operations, Dasouche has to rely heavily on short-term borrowings for working capital. In 2025, the company borrowed 211 million yuan in short-term third-party loans and repaid 197 million yuan at the same time. This tight balance model of "borrowing new and repaying old" is extremely sensitive to the external environment. Once the cooperative licensed financial institutions tighten access due to rigid compliance requirements such as "core risk control is not allowed to be outsourced", Dasouche's financing and traffic portal cooperation model will face a systematic reshaping. The double squeeze of historical baggage and industry changes In the process of trying to achieve a "soft landing" through capital and business transformation, Dasouche also needs to face compliance and reputation issues left over from history. In the field of second-hand car finance, Dasouche has rapidly grown its sales volume with the "Dangeche" platform launched in 2016. However, the financial leasing model of "10% down payment, rent before buying" blurred the boundaries between leasing and credit due to early sales promotion rhetoric, which triggered long-term consumer rights turmoil and disputes in the sinking market. Although Dasouche has completed its reorganization in September 2022 and completely divested its C-end car financing leasing business in an attempt to clear listing obstacles, the social imprint formed by this period of history has not completely dissipated. There are still countless judicial documents involving the platform on the China Judgment Documents Online. As of May 29, 2026, the cumulative complaints about the platform on the online complaint platform have remained at more than 3,000 (see Caizhongshe's previous article "After the US$3.5 billion valuation: The repricing pressure behind Dasouche's registration in the United States"). Under the strict scrutiny of the U.S. Securities and Exchange Commission, the resolution progress of these historical lawsuits and possible contingent liabilities still need to be clearly defined. At the same time, changes in the external industry structure are also further reducing Dasouche’s room for maneuver. As the penetration rate of new energy vehicles explodes, major new energy vehicle companies generally implement official direct sales channels and closed-loop replacement ecology, which has virtually changed the way traditional second-hand car dealers obtain some high-quality vehicle sources. In this stock game, traditional e-commerce giants and self-built systems of car companies are squeezing the living space of third-party service providers. For Souche, which has just crossed the threshold of the US stock market, obtaining a capital window through listing is only the first step. What the market ultimately needs to judge is whether Souche can prove that it has completed its transformation from a transaction service platform to a digital infrastructure company, and this judgment will ultimately be implemented in its revenue structure, profitability and cash flow performance. (
Currently, the loss ratio of domestic second-hand car dealers has climbed to 73.6%, and the average profit of a single transaction is only about 1,500 yuan. For Dasouche, car dealers are not only paying customers of digital tools, but also the business source of transaction services. When the profit margins of downstream operating entities narrow, the first thing they compress is often non-core service expenditures. With their own living space being severely squeezed, small and medium-sized car dealers have very limited willingness and ability to pay for such digital tools. This cold winter in the industry chain is directly transmitted to Dasouche’s income structure. Due to the obstruction of software monetization, Souche has to rely on the other 85% of its revenue source - transaction services with low gross profit margin. In essence, the company is still earning revenue from heavy offline services such as testing and logistics, which has also caused its overall gross profit to continue to decline from 306 million yuan in 2023 to 260 million yuan in 2025. The story of “AI infrastructure” tortured by R&D data In order to obtain a higher price-to-sales valuation in the U.S. stock market, Dasouche told a technologically-rich story in its prospectus, positioning itself as “China’s No. 1 second-hand car AI application infrastructure stock.” The company emphasized that it has deeply embedded AI applications into the system of its flagship product "Dafengche" in an attempt to reshape the used car industry chain. However, this very forward-looking technological narrative seems somewhat lacking in confidence in the face of the company's R&D investment bill. Data from the prospectus show that from 2023 to 2025, Dasouche’s research and development expenses will be 85.6 million yuan, 100 million yuan and 84.66 million yuan respectively. Not only did R&D investment in 2025 not increase, but it was lower than the level in 2023. Compared with the high R&D investment characteristics of technology-based SaaS companies that are generally recognized by the market, the scale of Dasouche's R&D investment is still limited. The mismatch between core technology indicators and financial data makes the market naturally re-evaluate the quality of its technology. While investment in technology research and development is limited, the commercialization of AI technology in the non-standard field of used cars is also facing great objective restrictions. The second-hand car market has a strong "one car, one condition" attribute. Although AI is relatively mature in the pricing and appearance identification of conventional models, its accuracy still has flaws when it comes to hidden vehicle conditions such as water damage, hidden diseases, and meter adjustments. The judgment error is even greater for older vehicles and modified vehicles. It is generally believed in the industry that AI-assisted decision-making for conventional vehicles still needs to be continuously optimized, while automated decision-making capabilities covering complex vehicle conditions still face a long research and development cycle. At a stage when this technical barrier has not yet been fully transformed into a moat, it is obviously difficult to maintain the confidence of secondary market investors with a high-premium technology narrative to carry a business that is highly dependent on offline and has meager profits. Fund Balancing Techniques in the Pains of Business Shift If the gap in technological narratives affects the imagination of valuations, then fundamental data directly lowers the lower limit of asset pricing. Dasouche’s prospectus completely revealed its financial cards to the market. From 2023 to 2025, Dasouche's total revenue was 909 million yuan, 948 million yuan and 677 million yuan respectively, of which the total revenue in 2025 dropped significantly by 28.6% year-on-year. Although the company explained that this was mainly due to the initiative to divest B2B financial product referral services at the end of 2024, this move objectively caused the financial performance of business contraction, and also exposed the reality of weak growth in its main business after losing financial business support. Corresponding to the fluctuations in revenue, Dasouche is in a long-term state of consolidated net losses. The company's consolidated net losses in the past three years were 187 million yuan, 157 million yuan, and 94.56 million yuan respectively. A more severe test comes from the tight balance of the capital chain. Dasouche's operating cash flow has been in a state of net outflow for three consecutive years. From 2023 to 2025, the operating cash flow will have a net outflow of 163 million yuan, 213 million yuan and 90.37 million yuan respectively. Continuous cash losses are eroding the company's book capital. Its cash, cash equivalents and restricted cash held at the end of the year have shrunk from 302 million yuan at the end of 2023 to 180 million yuan at the end of 2025, a shrinkage of 40.3%.
In order to maintain normal operations, Dasouche has to rely heavily on short-term borrowings for working capital. In 2025, the company borrowed 211 million yuan in short-term third-party loans and repaid 197 million yuan at the same time. This tight balance model of "borrowing new and repaying old" is extremely sensitive to the external environment. Once the cooperative licensed financial institutions tighten access due to rigid compliance requirements such as "core risk control is not allowed to be outsourced", Dasouche's financing and traffic portal cooperation model will face a systematic reshaping. The double squeeze of historical baggage and industry changes In the process of trying to achieve a "soft landing" through capital and business transformation, Dasouche also needs to face compliance and reputation issues left over from history. In the field of second-hand car finance, Dasouche has rapidly grown its sales volume with the "Dangeche" platform launched in 2016. However, the financial leasing model of "10% down payment, rent before buying" blurred the boundaries between leasing and credit due to early sales promotion rhetoric, which triggered long-term consumer rights turmoil and disputes in the sinking market. Although Dasouche has completed its reorganization in September 2022 and completely divested its C-end car financing leasing business in an attempt to clear listing obstacles, the social imprint formed by this period of history has not completely dissipated. There are still countless judicial documents involving the platform on the China Judgment Documents Online. As of May 29, 2026, the cumulative complaints about the platform on the online complaint platform have remained at more than 3,000 (see Caizhongshe's previous article "After the US$3.5 billion valuation: The repricing pressure behind Dasouche's registration in the United States"). Under the strict scrutiny of the U.S. Securities and Exchange Commission, the resolution progress of these historical lawsuits and possible contingent liabilities still need to be clearly defined. At the same time, changes in the external industry structure are also further reducing Dasouche’s room for maneuver. As the penetration rate of new energy vehicles explodes, major new energy vehicle companies generally implement official direct sales channels and closed-loop replacement ecology, which has virtually changed the way traditional second-hand car dealers obtain some high-quality vehicle sources. In this stock game, traditional e-commerce giants and self-built systems of car companies are squeezing the living space of third-party service providers. For Souche, which has just crossed the threshold of the US stock market, obtaining a capital window through listing is only the first step. What the market ultimately needs to judge is whether Souche can prove that it has completed its transformation from a transaction service platform to a digital infrastructure company, and this judgment will ultimately be implemented in its revenue structure, profitability and cash flow performance. (