Jim Cramer expressed optimism regarding SK Hynix's stock, despite its recent downturn, citing that the memory chips are trading at a premium while the stock itself is available at a discount. This sentiment comes on the heels of a significant drop in the company’s shares, which fell 9.32% on Tuesday, bringing the price down to ₩1,746,000, following a two-day selloff after its record-setting debut on NASDAQ.
SK Hynix's American Depository Receipts (ADRs) launched on July 10 at $168.01, marking a 13% increase on the first day and generating $26.5 billion in capital. However, on July 13, the Seoul-listed shares experienced a staggering 15.4% drop, the most significant decrease since the listing. This decline can be attributed to multiple brokerages revising their Q2 earnings forecasts downward, influenced by lower than expected selling prices for high-bandwidth memory (HBM) chips and a slowdown in DRAM growth.
Analysts from three major Korean brokerages, including Korea Investment Securities and Mirae Asset Securities, cited that the decline in average selling prices for HBM chips has raised concerns, especially given the reliance on HBM pricing for SK Hynix’s growth narrative. The valuation disparity, with ADRs trading at over a 20% premium compared to domestic shares, has led to a rotation of investors selling local stocks in favor of the ADRs.
Nonetheless, the company’s financials remain solid, with Q1 2026 revenues soaring to KRW 52.58 trillion ($35.05 billion), reflecting a 198% increase year-over-year. The net profit surged by 397.6% to KRW 40.35 trillion ($26.89 billion), bolstered by strong demand for AI memory. As SK Hynix continues to secure partnerships with leading tech companies like Nvidia and expand its manufacturing capabilities, the long-term outlook appears promising.
This material is for informational purposes only and should not be considered financial advice.
