SK Hynix drops 10% in Seoul after ADR debut sparks valuation confusion

SK Hynix shares fell more than 10% in Seoul on Monday, erasing most of the gains from the chipmaker's strong Nasdaq debut two sessions earlier. The stock had jumped 13% on Friday in its U.S. listing, drawing heavy demand from American investors chasing AI-linked semiconductor names.

The reversal reflects profit-taking and a deeper uncertainty: how to price the company now that a second trading venue exists. Analysts said the ADR listing has effectively created a new valuation benchmark, one that has exposed a wide gap between the two markets.

"Everybody's really confused about what's going to happen to the memory demand and where the fair price is," Daniel Yoo, global strategist at Yuanta Securities, said on CNBC's "Squawk Box Asia." "It's all about how much demand is there versus how much supply is going to come in ... what kind of multiple you will be getting."

Yoo pointed to Taiwan Semiconductor Manufacturing Co. as a reference point. TSMC's U.S.-listed ADRs trade at a roughly 13% to 14% premium to its domestic shares. SK Hynix's sharp move has created a discount rate of more than 20% between its U.S. and Korean listings, he said. (TSM carries an AlphaScala Alpha Score of 75 out of 100. See the TSM stock page for details.)

Yoo also attributed the sell-off to the mechanics of the offering itself. He called it "additional share issuance" that increased the supply of stock available to investors. "The market is taking this as a correctional period for SK Hynix domestically."

He expects the pullback to prove temporary. Structural AI demand continues to outpace supply, he said, and shares will likely move "in the right direction" over the next six to 12 months despite near-term volatility.

Phillip Wool, chief research officer at Rayliant Global Advisors, downplayed the weakness in Asian AI hardware names. He described it as a portfolio rebalancing exercise, not a deterioration in the industry's outlook.

"I think it's mostly risk management," Wool said. Many investors had accumulated outsized positions in South Korean and Taiwanese AI chipmakers after their strong gains. "Prudent risk management suggests you have to scale those back."

Wool added that the selling "doesn't really speak to any sort of reduction in the excitement about AI hardware." He said the AI investment theme was broadening beyond semiconductors, a shift that should continue to benefit memory suppliers such as SK Hynix.