[Into the Stocks] 'Metaverse Giant' Giantstep, Smiles at Capital Increase but Also Faces Challenges

985 Billion Won Capital Increase for Metaverse New Business
Sharp Rise in Stock Price
Adjustment Due to Executive Profit-Taking

[Asia Economy Reporter Ji Yeon-jin] 1463%. This was the return rate when Giant Step, which was listed on the KOSDAQ market in March this year, hit its highest price last month. This stock, with a public offering price of 11,000 KRW, formed an opening price at twice the public offering price on the first day of listing and succeeded in hitting the upper limit price on the same day, known as ‘ttasang’, then continued to rise and surpassed the 100,000 KRW mark on July 10. Afterward, the stock price declined but showed a steep upward trend from October, soaring to 172,000 KRW on the 17th of last month.

Giant Step is a VFX (Visual Effects) company established in 2008. It has secured optimal live technology and equipment operation know-how in the field of real-time content production. Additionally, it is expanding its business area into immersive new media content such as holograms, VR (Virtual Reality), AR (Augmented Reality), and interactive design. VFX is a technique that synthesizes images or videos that are restricted in filming or do not exist in reality through special effects technology, widely used in content industries such as games and movies. This year, as metaverse-related stocks gained popularity in the stock market, Giant Step’s stock price soared dramatically. However, since the end of last month, the stock price has been declining again, dropping more than 10% in a single day on the 2nd. The issue of paid and free capital increases seems to be affecting the stock price.

The company decided on a paid capital increase worth 98.5 billion KRW and a 1:1 free capital increase on October 1. HYBE, the agency of BTS (Bangtan Sonyeondan), also participated in the shareholder allocation paid capital increase by purchasing subscription rights for new shares worth about 4 billion KRW. Generally, paid capital increases are considered negative as they increase the number of circulating shares and pull down the stock price, but in Giant Step’s case, the capital increase was for raising funds to incorporate subsidiaries for expanding the metaverse new business, which led to a rise in the stock price after the capital increase decision. Researcher Lee Hye-in of Yuanta Securities evaluated, "The company’s growth value will be stronger than the shareholder value dilution factor (13%)."

However, six key executives, including co-CEO Lee Ji-cheol, sold 146,452 subscription rights for new shares related to the paid capital increase at around 40,000 KRW per share, causing the recent stock price to retreat. These executives appear to have realized profits early in anticipation of the stock price decline due to the capital increase, as Giant Step’s corporate value surged sharply after listing. However, when new shares from capital increases or convertible bonds are listed, investors who have secured rights to receive new shares may sell early from two days before the new shares are listed, confirming profits through rights selling, which could impact the stock price again at the end of this month.

This content was produced with the assistance of AI translation services.