- SK Hynix’s ADRs rose 12.7% on Nasdaq debut Friday but the entire gain was erased by Monday as Seoul-listed shares dropped 12.7%.
- The $26.5 billion offering, the largest US share sale by a foreign company, sustained profits for less than one trading day before the arbitrage turned against American buyers.
- Each ADR represents one-tenth of a SK Hynix share, creating a direct pricing link that led to a rapid repricing when Seoul markets reopened.
SK Hynix, the South Korean AI chipmaker and one of NVIDIA‘s largest customers, saw its entire 12.7% first-day gain from its US debut evaporate within days as the math turned against American buyers. The company’s ADRs rose 12.7% on the Nasdaq debut Friday, closing at $168.01, while its Seoul-listed common stock fell 12.7% by Monday afternoon.
Consequently, US money flowed into South Korea‘s largest company on Friday, followed immediately by South Korean money dumping Monday by roughly the same percentage. Each American Depositary Receipt represents one-tenth of a real SK Hynix share, meaning the Seoul drop repriced the exact asset backing every ADR sold in New York.
SK Hynix priced 177.9 million ADRs at $149 apiece on Thursday, raising about $26.5 billion in a deal run by Bank of America, Citigroup, Goldman Sachs and JP Morgan. The ADRs opened mid-day Friday at $170, 14% above the offer price, and briefly touched $177.
By Friday’s close they traded at a premium of roughly 15% to the Seoul shares. By Monday morning, Seoul bid 10% less at the start of the morning, with a worsening figure below 12% as the day went on.
On Friday, SK Hynix‘s spokesperson told CNBC, “It’s a kind of dream, and now it’s a dream come true.” The ADR offering itself was more than seven times oversubscribed.
Unfortunately, for US buyers who chased the record-setting debut, the scoreboard has already flipped for a win across the Pacific.
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