SK Hynix’s Seoul shares plunged over 15% on Monday, marking their largest one-day fall in nearly two decades, as investors unwound gains after the company's successful Nasdaq debut. This sharp decline followed a strong performance last week, where its American Depositary Receipts (ADRs) opened 14% above their offer price of $149, closing at $168 on their first trading day. The U.S.-listed shares later dropped 7.9% to $154.7 in early Monday trading, still maintaining a premium of about 25.6% over the South Korean share price after the rout.
The decline was largely attributed to profit-taking after the conclusion of the U.S. listing and investor caution regarding SK Hynix’s second-quarter earnings. Analysts, such as Ryu Young-ho of NH Investment & Securities, noted that investors moderated earnings expectations partly because SK Hynix, with its greater exposure to the HBM market, was expected to benefit less from a recent rise in prices for conventional DRAM chips. Korea Investment & Securities projected SK Hynix's Q2 operating profit to be 60.4 trillion won, falling short of the 65 trillion won consensus estimate.
Despite the significant proceeds of $26.5 billion raised from the ADR offering, which the company plans to invest in chip fabrication plants and equipment in Korea, the sell-off was led by foreign and institutional investors in Seoul. The company's shares closed down 15.37% at 1.85 million won ($1,230) on Monday. This volatility contrasts with the initial expectation that the Nasdaq listing would rererate Seoul-listed shares and improve access for foreign investors. While some analysts, like Kim Doo-un of Hana Securities, see the ADR as a test for revaluation, others like Hwang San-hae of LS Securities believe the market is still discovering the appropriate premium, leading to early-stage volatility.
The broader market sentiment was also impacted by concerns of potential oversupply in the memory chip market in the coming years, with Morningstar equity analyst Jing Jie Yu suggesting that fresh capacity in 2027 and 2028 could lead to price erosion. However, SK Hynix CEO Kwak Noh-jung dismissed these concerns, forecasting a severe supply shortage in 2027 and sustained demand exceeding production capacity well into the next decade. Phil Blancato, president and CEO of Ladenburg Thalmann Asset Management, viewed the current pullback as profit-taking but not the "end of the run" for memory chip stocks.
