SK Hynix ADR closed at $143.02 on May 27 (local time), marking a 7.47% decline and falling below its $149 IPO price for the first time since listing on May 10. The drop occurred as investor sentiment toward Nvidia, a key customer, deteriorated sharply. SK Group had announced a $500 billion partnership with Nvidia on May 24 (local time), but concerns over Nvidia's massive investment scale and circular financing practices with AI companies triggered a 4.99% plunge in Nvidia stocks the same day, dragging SK Hynix ADR lower.
SK Hynix ADR Falls Below IPO Price on May 27
SK Hynix ADR closed at $143.02 on the New York Stock Exchange on May 27 (local time), down 7.47% from the previous session, according to Yonhap Infomax's stock price screen (number 7219). This marked the first close below the $149 IPO price since the ADR listing on May 10. The stock dropped as low as $139.01 during the session, representing a 10.07% intraday decline.
The closing price stood 16% below the listing day opening price of $170 and 27% below the all-time high of $194.80.
SK Group Announces $500 Billion Nvidia Partnership
SK Hynix ADR initially rose 3.33% in early New York trading on May 27 (local time) following news of SK Group's $500 billion partnership with Nvidia. Under the agreement signed on May 24 (local time) at The Midway in San Francisco, Nvidia will purchase memory semiconductors from SK Hynix, while SK Group will use Nvidia GPUs to build 2 gigawatts of AI data center capacity. President Lee Jae-myung attended the signing ceremony alongside SK Chairman Chey Tae-won and Nvidia CEO Jensen Huang.
Nvidia Stocks Drop 4.99% Amid Investment Concerns
Nvidia stocks fell 4.99% on May 27 (local time) as market concerns over the company's investment scale intensified. Nvidia's 5-year credit default swap (CDS) premium rose 14 basis points to 82bp during the session, reflecting heightened credit risk perceptions tied to AI investment concerns.
Market participants raised questions about circular financing arrangements between Nvidia and major AI companies. Nvidia invests in OpenAI, which then uses those funds to purchase Nvidia GPUs. Analysts noted the SK Group transaction follows a similar pattern.
Gary Tan, portfolio manager at AllSpring Global Investments, stated: "Nvidia's investments and partnerships strengthen confidence in long-term AI infrastructure buildout, but investors remain concerned about circular financing."
Chris Larkin, managing director of trading and investing at E*TRADE, said: "Geopolitics and oil prices may be the biggest variables, but strong earnings from the Magnificent Seven don't necessarily guarantee a bullish market response, especially as the scale of AI investments continues to raise questions."
FAQ
What happened to SK Hynix ADR stocks on May 27?
SK Hynix ADR closed at $143.02 on May 27 (local time), down 7.47%, marking the first close below its $149 IPO price since listing on May 10. The stock fell as low as $139.01 during the session.
Why did SK Hynix ADR fall despite the Nvidia partnership announcement?
Although SK Group announced a $500 billion partnership with Nvidia on May 24 (local time), investor concerns over Nvidia's massive investment scale and circular financing practices with AI companies caused Nvidia stocks to drop 4.99% on May 27 (local time), which pulled SK Hynix ADR lower.
What did analysts say about Nvidia's AI investments?
Gary Tan of AllSpring Global Investments stated that Nvidia's investments strengthen confidence in AI infrastructure but noted investor concerns about circular financing. Chris Larkin of E*TRADE said strong earnings from major tech companies don't guarantee bullish market reactions, especially as AI investment scale continues raising questions.
