Market AnalysisJul 14, 20262 Min

SK Hynix shares slide over 20% within 2 days, just before making a U-turn: What happened?

South Korea-listed shares of chipmaker SK Hynix Inc. tumbled over 9% in intra-day trade on Tuesday. This came after a 15.4% decline in the share price in the previous session on Monday.

But soon after the two-day slide peaked at around 23%, the share price started reversing. Not only did it erase all the intra-day losses, the stock managed to jump 3.7% at around the close of the trading hours on Tuesday.

What exactly happened in these two days and what made the investor see the buying opportunity in SK Hynix again? Let’s take a look:

ADR listing

South Korean semiconductor giant SK Hynix raised a record-breaking $26.5 billion through one of the largest US share sales ever by a foreign issuer. The company sold 177.9 million American depositary receipts (ADRs) at $149 each.

On Friday, the ADRs listed on the Nasdaq stock exchange at $170 and closed the listing day at $168.01, rising 12.8% from the issue price.

However, on Monday, the ADR price cracked 9.3%, erasing much of the gains from the debut trading session.

The decline in the ADR was primarily driven by a broader selloff in AI stocks on concerns of higher valuations and overspending on the tech infrastructure.

Impact on SK Hynix’s South Korea-listed shares

The South Korea-listed shares of SK Hynix also took a hit as the company’s ADRs came under pressure. A cluster of brokerage downgrades back home on the company’s Q2 earnings outlook worsened the situation.

Firms like Korea Investment Securities, Mirae Asset Securities, and Hyundai Motor Securities lowered their operating profit estimates for the company. The downgrade was attributed to the company’s lower-than-expected average selling prices for high-bandwidth memory and softer DRAM (dynamic random-access memory) bit growth.

Consequently, the stock saw a cumulative decline of as much as 23% before making a quick turnaround in mid-day trade on Tuesday.

Policy boost

SK Hynix shares bounced back as much as 14% from Tuesday’s intra-day low levels to close 3.7% higher after reports emerged that South Korea’s ruling party is trying to ease capital-raising rules for the company.

According to a report, in order to push South Korea as an AI powerhouse, the ruling government is seeking to make it easier for SK Hynix to set up ventures to build factories with outside investors.

Members of Democratic Party of Korea have proposed amending ‌a law ⁠pertaining to “strategic ⁠industries with cutting-edge technologies” that currently forbids a subsidiary of a subsidiary from such a move.

SK Hynix is a unit of SK Square, which is in turn a unit of SK Inc. If the law is passed, SK Hynix will be able to attract outside capital for its new fabs if it retains a stake of at least 50% in such a ⁠joint venture.

The sentiment around the stock quickly changed after the news as it paved way for SK Hynix’s future expansion plans amid a time when memory shortage fears are gripping the markets.

All eyes would now be on the company’s earnings for the second quarter ended June 2026 that are due to be released on July 22.