South Korean AI computing supplier Elice Inc. surged on Wednesday, recovering much of the ground lost after a 32% slump in its trading debut, as a string of upbeat US tech earnings lifted sentiment. The neocloud firm's stock jumped by the 30% daily limit on Seoul's small-cap Kosdaq index to reach 79,900 won, though it remained below its IPO price of 90,500 won. The Kospi index gained as much as 4.8%, while the Kosdaq index advanced 2.8%.
Largely unknown outside South Korea until this week, Elice sought to tap investor enthusiasm for AI through its IPO. Its record first-day decline indicated growing investor skepticism toward neoclouds, a fast-growing corner of the AI industry. Neoclouds, which provide vast data center capacity for artificial intelligence, have become a focal point for investor concerns about the sustainability of heavy AI infrastructure spending. CoreWeave Inc., the most prominent of the world's neoclouds, has seen its shares plunge 20% over the past week on concerns over its heavy borrowing.
Elice analyst Huh Jae-Hwan of Eugene Investment & Securities said the valuation isn't cheap, but the share price fall was excessive. Elice CEO Jae Won Kim said the company is doubling revenue compared to last year, calling that minimum guidance. Kim also noted the company can deploy factory-assembled facilities in less than three months.
The rebound was largely driven by better-than-expected US quarterly reports, including results from Super Micro Computer Inc. and SpaceX. Citigroup strategists warned that crowded short positioning in Kospi 200 futures raises the risk of rapid covering if sentiment improves. Elice's retail offering was oversubscribed by about 400 times, but Tuesday's plunge was the largest ever opening-day decline for a Korean IPO.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing