Online grocer Dingdong Maicai slashed the target for its US initial public offering by nearly 74% on Monday, just three days after the company’s rival MissFresh debuted to disappointing results on the Nasdaq. 

Why it matters: Dingdong’s downsizing signals a cooling appetite for Chinese online grocers as the sector grows more competitive and attracts regulatory attention. 

• Dingdong’s rival MissFresh saw its shares drop by more than 30% following its Nasdaq debut on June 25. 

READ MORE: MissFresh shares sink on IPO as grocery faces bumpy ride

Details: In a Monday filing, Dingdong Maicai said it plans to raise $94.4 million in its US IPO, down by more than 70% from its original target of $357 million. Chinese media reported that Dingdong plans to go public on June 29 on the New York Stock Exchange.

• The Shanghai-based company plans to offer fewer shares, reducing its offering from 14 million shares to 3.7 million.
• Dingdong set a price range of $23.5 and $25.5 per share.

Context: Founded in 2017, Dingdong Maicai offers fresh produce and grocery deliveries through a mobile app. The platform’s most popular categories are vegetables, fruit, and seafood. 

• The company saw its orders more than triple between 2019 and 2020, thanks to a surge in demand for grocery delivery services during the coronavirus pandemic. 
• The company secured more than $1 billion in investment in April and May. Investors include some of the most prestigious global funds, such as SoftBank Vision Fund, Tiger Global Management, and Sequoia Capital China.
• Dingdong Maicai and MissFresh are operating on losses and burning cash to fend off fierce competition from tech giants, such as Alibaba, Pinduoduo, and Meituan.
• China’s market regulator has kept a close watch on the online grocery sector. In March, regulators fined five platforms totalingRMB 6.5 million (about $1 million) for irregular pricing. The companies included Pinduoduo’s Duoduo Maicai and Didi’s Chengxin Youxuan. Dingdong wasn’t fined, but the company has been punished by regulators for food safety complaints at least 19 times, Chinese news reported.