SK hynix surges on its first day of trading on the US stock market

Author: Allen Rutte; Source: Barrons

SK Hynix jumped 13% on its first day of trading on the Nasdaq, closing at $168.49, as investors rushed to place bets on the key global AI supply-chain company.

The chipmaker’s American depositary receipts (ADRs) opened at $170 on Friday and reached a high of $177 during the session, up 19% from the IPO offering price.

The company set the offering price for each ADR at $149 on Thursday. Every 10 ADRs correspond to 1 share of local common stock in South Korea, translating to $1,490 won per share of the underlying stock—an overage of 2.8% versus its latest closing price in the Korean market.

The issuance totaled 177.9 million ADRs. Overall, SK Hynix raised $26.51 billion through this offering, surpassing Alibaba and setting a record for the largest-ever overseas corporate fundraising via a U.S. listing. SK Hynix is the second-largest company by market value in South Korea, behind Samsung.

The funds raised will support the company’s expansion plans, including investments in factories and equipment, to seize opportunities brought by the AI boom.

Despite SK Hynix’s strong performance on its first day of listing in the United States, the stock listed in Seoul did not rise in tandem on Friday; it closed down 0.3% at 2.18 million won. Dragged down by the shares, South Korea’s benchmark KOSPI index fell 7.6% cumulatively over the week.

However, this has not weakened the stock’s long-term upward momentum. Benefiting from ongoing data-center construction that has continued to drive a surge in demand for memory chips, SK Hynix’s stock price in the Korean market has soared 640% over the past year.

In the early stage of ADR trading, the company began trading under the temporary ticker “SKHYV.” The letter “V” indicates that the security is in the pre-issuance trading phase, allowing investors to buy and sell the shares before the stock is officially listed.

Next week, the fifth letter in the ticker will be removed. SK Hynix confirmed in its prospectus that it has been approved to list on the Nasdaq Global Select Market under the ticker “SKHY.”

Earlier, Barron’s had given SK Hynix’s ADR a positive assessment, saying that compared with U.S. company Micron Technology, the ADR offers a cheaper way to participate in the memory-chip boom. Even though SK Hynix is larger in business scale, its valuation is lower than Micron’s, and it has close ties with its major customer, Nvidia.

Masahiro Wakasugi, a technology analyst at Bloomberg Intelligence, said SK Hynix “very early established its position as Nvidia’s preferred supplier.” Since its overall market share in the dynamic random access memory (DRAM) market is higher than Micron’s, “it can be said to have an advantage in economies of scale,” Wakasugi added.

International companies’ ADRs typically trade at a premium versus their domestically listed underlying shares, because ADRs enable American and global investor groups who would otherwise find it difficult to invest in that company to participate. For example, memory-chip maker TSMC’s ADR often trades at a significant premium to its locally listed shares in Taipei.

If SK Hynix can continue to firmly maintain its first-mover partnership advantage with Nvidia, this premium in U.S. stocks may persist—giving Wall Street yet another heavyweight mega-cap to bet heavily on in the AI race.