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How to buy stock in Waterdrop when it goes public

Chinese online insurance platform prepares to file an IPO in the US.

Waterdrop uses a crowdfunding model to provide illness insurance, and the company has a $2 billion valuation at its back. But its IPO filing with the U.S. Securities and Exchange Commission (SEC) isn’t guaranteed.

What we know

Waterdrop is planning to open the doors to US investors by filing an IPO with the SEC. While the paperwork has yet to be filed, the deal is said to be brokered by Goldman Sachs and Bank of America. No word yet on when shares will be tradable, how many will be available or at what price.

How to invest in Waterdrop

In a recent funding round, Waterdrop raised $230 million from private investors. Among them were Chinese Internet titan Tencent Holdings and Swiss reinsurance company Swiss Re.

Waterdrop intends to use the raised capital to introduce artificial intelligence and big data technology to its insurance products and further increase its expansion into healthcare services. During its most recent funding found, it was valued at $2 billion.

If you’re interested in purchasing Waterdrop shares once they become available, you’ll need a brokerage account. But before you add this company to your watchlist, consider its age. Founded in 2016, Waterdrop lacks the financial history of more established companies, and it will be difficult to tell how it’ll fare in unstable market conditions. While newer companies offer the opportunity for growth, they can also be volatile.

Waterdrop compared

Waterdrop is a Chinese online insurance platform that distributes policies through Waterdrop Insurance Mall. It was founded in 2016 and is headquartered in Beijing, China. As of this writing, it has over 120 million policyholders and reported a total written premium of $865 million in the first half of 2020 — a figure it expects to double by the end of the year.

Results of similar IPOs

Here’s how some of Waterdrop’s US competitors in the health insurance industry fared after going public:

Cigna (CI) is an international health services organization based in Bloomfield, Connecticut. It launched its stock in 1982 trading at $4. In the following decade, it saw minimal growth, but in 1996, it began to gain traction. After several significant dips, it hit an all-time high of $220.15 in early 2018. It now trades at $179.09.

Humana (HUM) is a for-profit health insurance company headquartered in Louisville, Kentucky. It launched on the New York Stock Exchange trading at $7.75 in 1993. The stock saw moderate growth until 2009 when it began to significantly climb. The stock currently trades at an all-time high of $417.19.

UnitedHealth Group (UNH) is a managed health care company based in Minnetonka, Minnesota. It started trading at $0.14 back in 1984. The stock saw minimal growth until 1999 when it began to climb. After recovering from a significant drop in 2009, it rocketed its way to where it now trades at an all-time high of $312.80.

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Disclaimer: The value of any investment can go up or down depending on news, trends and market conditions. We are not investment advisers, so do your own due diligence to understand the risks before you invest.

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