Key facts
- SK Hynix shares plunged over 15% in Seoul, the largest one-day drop in nearly 20 years.
- The company's American depositary receipts (ADRs) surged 12.8% in their Nasdaq debut.
- SK Hynix raised over $26 billion through the ADR listing.
- The sell-off is attributed to concerns about the memory chip sector entering a bear market and the cooling of AI hype.
- Other recent high-profile IPOs, such as SpaceX and Cerebras, have also seen significant declines after initial surges.
SK Hynix shares experienced their largest one-day drop in nearly 20 years, falling over 15% in Seoul following a strong debut for its American depositary receipts (ADRs) on the Nasdaq. The ADRs, which surged 12.8% upon pricing and raised over $26 billion, have since tumbled sharply from their Friday high, trading slightly above the offering price.
The sell-off in SK Hynix and the broader Kospi index, which fell 8.9%, reflects growing concerns about the sustainability of AI-driven rallies and the cyclical nature of the memory chip industry, which has recently entered a bear market. Rival Samsung Electronics also saw its stock plummet despite strong results.
SK Hynix is the latest example of a high-profile offering struggling to maintain momentum after a hyped debut. SpaceX, which garnered a nearly $2 trillion valuation, saw its shares fall almost 40% from their peak. AI semiconductor maker Cerebras has also experienced a significant decline after its initial jump.
Market observers note that the current environment is challenging for new listings, with AI hype cooling and companies needing to deliver more than just strong earnings to sustain stock gains. The pipeline for anticipated IPOs, including AI giants Anthropic and OpenAI, remains full, with some suggesting companies are facing an acute need for capital.