Chagee Holdings Limited (NASDAQ: CHA), a leading premium tea drinks brand, saw its stock price soar by 5.02% in pre-market trading on Thursday. The significant uptick comes on the heels of the company's announcement that the underwriters of its recent U.S. initial public offering (IPO) have exercised their over-allotment option.

According to the company's press release, the underwriters purchased an additional 2,202,598 American Depositary Shares (ADSs) at the initial public offering price of $28.00 per ADS. This exercise resulted in additional gross proceeds of approximately $61.7 million for Chagee, before underwriting discounts and commissions. The over-allotment option closed on April 30, 2025, just a day before the stock's significant movement.

The successful exercise of the over-allotment option, also known as the "green shoe," is often viewed positively by investors as it indicates strong demand for the company's shares. This additional capital infusion is likely to strengthen Chagee's financial position as it continues to expand its premium tea drinks business and reshape the global tea industry. The market's enthusiastic response underscores investor confidence in Chagee's business model and growth prospects in the competitive beverage market.