Why I'm So Excited About the Instacart of China

Shares of Dingdong (Cayman) (NYSE: DDL) gained as much as 28% on the day of its IPO debut before losing the bulk of those gains in a wild trading session. Now, one problem with investing in China-based American depositary receipts (ADRs) is that their names often don't inspire confidence. Just for the record, Dingdong (Cayman) doesn't sell doorbells in the Cayman Islands. (I wish it did, though!)

Jokes aside, investors are frequently find themselves holding the short end of the stick when buying Chinese ADRs. For starters, almost all such companies incorporate themselves somewhere in an island in the British West Indies, which can free the parent company of liabilities in the event of litigation. What's more, prior instances of malfeasance with companies like Luckin Coffee (OTC: LKNC.Y) have damaged the reputation of Chinese ADRs on a whole.

Luckily, those aren't the issue with Dingdong. Think of the company as the Instacart of China, but better in some ways. The company operates in 29 cities across China. Users order what they want on the namesake app with no service fees or minimum order size for deliveries. Tips are also not expected. Dingdong makes money solely by charging delivery fees or membership fees for premium services.

Source Fool.com