Shares of Here Group, Zepp Health, Burning Rock Biotech and So-Young International all posted meteoric gains last year, but have given most of that back in 2026

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Key Takeaways:

• A group of small- and midcap U.S.-traded Chinese companies that briefly notched sharp rallies over the last year have given back most or all of the gains
• Investors may have been lured to the shares on belief they were undervalued, though their rise and fall also comes as the U.S. cracks down on suspected stock manipulation

What do collectible toys, wearable health devices, cancer tests and cosmetic surgery have in common?

Certainly not much, in terms of their business. But companies from all four of these areas were among a group we previously called "Chinese Easter Eggs," after their stocks suddenly soared last year, often rising many-fold in just months. Fast forward to the present, when the Easter Egg party is definitely over, and most of these stocks have given back nearly all their gains.

The U.S. securities regulator and the Nasdaq, where most of these stocks are traded, are quite aware of this phenomenon and have taken steps to stamp it out. Most notably, the Nasdaq is implementing new rules that require all new Chinese listings to raise at least $25 million, and is aggressively delisting companies if the value of their listed securities falls below $5 million.

None of the four companies we mentioned looks to be in imminent danger of delisting under the new regime, though the rule changes have sent a chill over new listings by Chinese companies on Wall Street. No major new Chinese companies have listed in New York in more than a year, and new listings by smaller companies have also come to a near halt since the Nasdaq announced its new rules.

Here today, gone tomorrow

All that said, we'll take a closer look at the four China Easter Eggs we mentioned, including their recently released earnings for the first quarter.

All four are in a stage of transition, which is relatively common in the business world as companies constantly look for the next new growth engine. That story is most relevant for Here Group, which jettisoned its original adult education business and jumped into the pop toy business about a year ago, just as the global Labubu sensation was peaking.

That radical move was probably what excited investors. Here Group's stock soared nearly sevenfold from around $2 at the end of 2024 to as high as $13.50 a year ago, before returning to its previous levels at its latest close of $2.05.

Next there's Zepp, which has been transforming from a maker of wearables for other brands, most notably China's Xiaomi, to developing its own brands, led by its Amazfit product line. Zepp's story was a little more compelling than Here Group's, since the company already had plenty of experience in wearables, even if it was new to brand development.

Despite the slowdown, there's no question the branded business offers much better margins. The company's first-quarter gross margin came in at 37.7%, compared with figures in the 20% to 25% range before its business shift.

Falling revenue at Burning Rock

Then there's Burning Rock, which is shifting its focus from at-home cancer testing services to in-hospital testing following a government crackdown that affected the former segment. The company's stock was also a stellar performer in the Easter Egg rally, rising from just $3 a year ago to as much as $41 this January. It now trades at around $9, making it one of the best performers post-Easter Egg rally.

Lastly there's So-Young, which is transforming from a referral company for cosmetic surgery services to an operator of its own chain of surgery centers. Such a model provides better quality control in this sensitive sector, though its new business comes with much lower margins than simple referral services. So-Young's shares rose from about $1 a year ago to a high of about $6 last July, before falling back to their current price of about $2.

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Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.