Punters face seller's remorse as dogs have their day

Finance

Published: 25 Jul. 2021, 07:00

Punters face seller's remorse as dogs have their day

People subscribe to initial public offering shares of SK IE Technology at a sales office of Korea Investment & Securities, one of five brokerages managing the IPO, in Seoul in April. [YONHAP]

Some retail punters who took profits early after IPOs now regret dumping their shares so quickly.

They have found that at least a few of the new listings have started to rise even after a hectic first few days of trading.

Kakao Games and SK IE Technology, both of which listed in the past year, disappointed investors as their shares declined following the offerings, but now their shares are skyrocketing, hitting record highs day after day.

Shares of Kakao Games closed at 100,400 won ($87.31) on Friday, up 0.2 percent from the previous trading day. It is the highest closing price after listing on Kosdaq in September last year. During trading, its shares rose to as high as 103,000 won, breaking its past record high of 101,500 won set a day earlier.

The game publisher is currently the second-largest listed stock on Kosdaq, with a market capitalization of 7.5 trillion won.

It started trading at 48,000 won per share, rose by the 30 percent daily limit on the first and second day, closing at 81,100 won. Then retail investors started unloading, and the price fell for seven straight trading days. By the end of October, the shares fell as low as 42,950 won.

Now, prices are rebounding. From July 1 through Friday, the game maker’s shares rose by roughly 74 percent.

The boost comes with the successful introduction of Odin: Valhalla Rising, the latest R-rated cross-platform game developed by Lionheart Studio and published by Kakao Games. The game has topped daily app store charts almost steadily since it was published on June 29.

“We are expecting the company’s performance to largely scale up with the success of Odin: Valhalla Rising,” analyst Ahn Jae-min from NH Investment & Securities wrote in a report Wednesday. “The game Odin is likely to thrive for over two or three years.”

Ahn added that as the company is preparing to roll out around 10 games in the latter half of the year, its performance boost will likely go on until 2022.

The stock of SK IE Technology, which is a battery material maker that listed as a Kospi stock in May, moved in a similar manner.

The initial public offering (IPO) of the SK Innovation subsidiary was expected to be one of largest IPOs of the year. It attracted a record 2,417 trillion won of bids from institutional investors — the record was broken recently by KakaoBank, which attracted 2,585-trillion-won of bids — raising expectations that its shares will jump after listing.

Trading started at 210,000 won on May 11, rose to 222,500 won three minutes into trading, but then ended the day 26.43 percent lower at 154,500 won. The closing price was still 47 percent higher than the offering price of 105,000 won, but retail investors were disappointed that the shares did not follow the pattern of some other IPOs.

SK IE Technology shares fell for five trading days, and didn’t recover their starting price until recently. The stock started to rise at the end of June, and from July 8, it traded above the 200,000-won mark.

On Friday, it closed at 235,500 won, up 2.17 percent from the previous trading day.

Recently announced business plans may have affected the share price.

In a corporate filing on July 1, the company announced plans to invest five trillion won over the next five years. The battery material maker said it will expand its battery separator production capacity to 4 billion square meters by 2025. By the end of this year, its capacity is expected to be 1.36 billion square meters. The company also said it projects its earnings before interest, taxes, depreciation and amortization to grow from 300 billion won in 2021 to 700 billion won by 2023 and 1.4 trillion won by 2025.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]