SK Hynix shares experienced their steepest-ever daily decline in Seoul, plummeting 15.4% on Monday, following its successful Nasdaq debut last week. The drop, which contributed to a 9% plunge in South Korea's Kospi index and triggered a 20-minute trading halt, was primarily attributed to investors taking profits after a significant rally and a reassessment of the valuation gap between its US and South Korean listed shares. Its US-listed ADRs, which raised over $26 billion and represent one-tenth of a share, had initially surged 12.8% to $168 on their first day, after being priced at $149 each.
The decline was also fueled by a pessimistic outlook for the chipmaker's second-quarter earnings. Korea Investment & Securities projected SK Hynix to fall 8% short of its second-quarter operating profit consensus, forecasting 60.4 trillion won ($40.2 million) rather than the estimated 65 trillion won ($43.3 million). Analysts revised down 2026 and 2027 operating profit estimates by 9% and 11% respectively, mainly due to more realistic pricing assumptions from long-term supply agreements. Investors also moderated expectations because SK Hynix's heavy exposure to High Bandwidth Memory (HBM) chips might mean less benefit from a recent rise in conventional DRAM prices.
The large-scale US offering, which was the largest US listing by a foreign company at $26.5 billion, increased the supply of SK Hynix shares available to investors, adding to selling pressure on its domestic stock. Despite expectations that the Nasdaq listing would improve access for foreign investors and rerated 서울-listed shares, the US ADRs continued to trade at a significant premium, approximately 37% higher than its South Korean share price after the Monday rout. This significant premium is often seen in companies with dual listings, benefiting from broader investor access and deeper liquidity in the US.
Concerns about future supply dynamics, fueled by large investments in Korea for new fabrication plants and equipment, have also played a role. While SK Hynix CEO Kwak Noh-jung dismissed oversupply concerns, forecasting a severe supply shortage well into the next decade, analysts like Morningstar's Lorraine Tan value the company at $160 per ADR and expect a normalization in cycle dynamics that could lead to price erosion as fresh capacity comes online in 2027 and 2028. The company plans to invest part of the $26.5 billion proceeds from the ADR offering into building chip fabrication plants in Yongin and Cheongju, and purchasing chipmaking equipment.
