SK Hynix experienced a sharp decline in its share price in Seoul, falling by a record 15.37% on Monday to 1.85 million won ($1,230), after its Nasdaq debut. This sell-off was primarily attributed to foreign and institutional investors who offloaded 1.41 trillion won and 1.47 trillion won worth of stock, respectively. Investors engaged in profit-taking after the company's U.S. listing, and sentiment was further dampened by a pessimistic earnings outlook for the company's second quarter, with Korea Investment & Securities forecasting a $60.4 trillion won profit, falling short of the $65 trillion won consensus estimate. This shortfall is linked to SK Hynix's greater exposure to high-bandwidth memory (HBM) and expected slower average selling price growth compared to conventional DRAM chips.
Simultaneously, SK Hynix's U.S.-listed American Depositary Receipts (ADRs) also saw significant declines. After a 12.8% gain on their Nasdaq debut, the ADRs dropped 7.9% in early trading, closing Monday down 9.32% at $152.35. The ADRs were priced at $149 each and opened 14% above the offer price at $170. Analysts from Morningstar noted that while the memory upcycle is stronger than expected, they anticipate a normalization in cycle dynamics, limiting upside, and value the company at $160 per ADR. The premium of the U.S. ADRs, trading at approximately a 37% premium to its South Korean share price, also contributed to investor caution.
Market analysts cited profit-taking after the U.S. listing and moderated earnings expectations as key drivers for the decline. Forecasts for SK Hynix's 2026 and 2027 operating profits were cut by 9% and 11% respectively, reflecting more realistic long-term supply agreement pricing. Although the CEO, Kwak Noh-jung, projects a severe supply shortage in 2027 due to demand exceeding production capabilities, concerns remain regarding aggressive capacity expansion leading to potential oversupply in 2027 and 2028. Additionally, the broader AI chip rally faces a valuation reset, with uncertainty surrounding monetization for key players like OpenAI and shifting funding dynamics.
