SK Hynix's American Depositary Receipts (ADR) dropped 9% a day after surging over 27%. This decline is attributed to profit-taking following a rapid price increase and a general weakness in U.S. semiconductor stocks.
On July 15, SK Hynix ADR closed at $176.46, down 9.0% from the previous trading day on the Nasdaq. The stock opened at $182 and briefly rose to $187.64 before reversing course. At one point, it fell to $166.50, more than 14% below the previous day's closing price.
The previous day's surge of 27.29% was fueled by global investment bank Barclays' recommendation to 'overweight' SK Hynix ADR, setting a target price of $330. Expectations for increased demand for high-bandwidth memory (HBM) and DRAM due to the expansion of artificial intelligence (AI) also contributed to the buying momentum. However, the rapid price increase led to a wave of profit-taking on this day.
As the ADR price surged in a short period, concerns grew that it had become excessively high compared to the shares listed on the domestic market. At one point, the ADR traded more than 50% above its value based on the domestic stock price.
Starting July 29, investors will be able to convert ADRs into domestic shares, which may increase trading aimed at narrowing the price gap between the two markets. This could potentially reduce the current significant price disparity.
The overall weakness in U.S. semiconductor stocks also played a role in the decline. While the Nasdaq index rose that day, the Philadelphia Semiconductor Index fell by more than 2%. The drop in major semiconductor stocks contributed to continued selling pressure on SK Hynix ADR.
Since its listing on the Nasdaq on July 10, SK Hynix ADR has experienced significant volatility. After starting at an offering price of $149, it soared to $193.92 before settling at $176.46. The current price remains approximately 18% higher than the offering price.
* This article has been translated by AI.
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