DearU down 17% in two days due to institutional selling... Lotte Rental and Aju Steel approaching lock-up release

[Asia Economy Reporter Lee Myunghwan] DearU has been struggling to recover as its stock price fell more than 17% just two days after the lock-up period ended. This weakness is interpreted as institutional investors selling shares to realize profits following the expiration of their lock-up obligations.

DearU is a subsidiary of SM Entertainment, providing services such as the private messenger platform 'DearU Bubble' for communication between celebrities and fans, and the karaoke application 'EverySing.'

DearU, which traded at 54,600 KRW on the 9th, began to decline from the start of trading on the 10th. The closing price on the 10th was 50,100 KRW, down 8.24% (4,500 KRW) from the previous day. On the 11th, the decline deepened, closing at 45,000 KRW, down 10.18% (5,100 KRW) from the previous day. Over the two days from the 10th to the 11th, the total decline reached 17.58% (9,600 KRW).

This is attributed to the expiration of the institutional lock-up period. A lock-up period is a system that prevents major shareholders and institutional investors from selling shares for a certain period during events such as new listings, acquisitions, or mergers. On the 10th, the lock-up on 539,213 shares held by institutions was lifted, allowing trading from that day. Since DearU’s current stock price is higher than the public offering price of 26,000 KRW, it is interpreted that institutions increased profit-taking sales.

This is also reflected in the trading status by investor type. On the 10th, institutions net sold DearU shares worth 8.4 billion KRW. Compared to foreigners who net sold 1.2 billion KRW and individuals who net bought 9.8 billion KRW on the same day, the institutional selling stance is prominent. Institutions continued their selling trend on the 11th, net selling about 5.9 billion KRW worth of DearU shares.

However, the expiration of lock-up periods does not always lead to large-scale stock price declines. Krafton, whose institutional lock-up of 210,000 shares also expired on the same day as DearU, closed at 297,000 KRW, down only 0.83% (2,500 KRW) from the previous day, showing resilience. Since Krafton’s current trading price is below its public offering price of 498,000 KRW, it is considered that institutions did not engage in large-scale selling on the lock-up expiration day due to limited profit-taking opportunities.

Meanwhile, Lotte Rental (on the 19th) and Aju Steel (on the 20th) are scheduled to have their lock-up periods expire this month on the KOSPI market. The lock-up release volumes are 22.21 million shares for Lotte Rental and 11.93 million shares for Aju Steel. According to the Korea Securities Depository, the total lock-up release volume in February is 220.28 million shares from 8 companies on the KOSPI market and 89.69 million shares from 36 companies on the KOSDAQ market.

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