[Beginner Investor Guide] 'Stock Price Drop Warning'... You Can Predict Which Stocks Will Fall in Advance

On the morning of the 27th, Kwon Young-soo, CEO of LG Energy Solution, who attended the KOSPI new listing ceremony of LG Energy Solution held at the Korea Exchange in Yeouido, Seoul, is striking a commemorative drum for the listing. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Kwon Jaehee] Recently, as battery recycling has gained attention, Saevitchem's stock price soared by a staggering 140% within a month after its listing, becoming a hot topic in our stock market. While it seemed like Saevitchem's stock would keep rising continuously, it suddenly plunged by 12% during trading on the 5th. Some may think this sudden drop is surprising given the booming battery recycling industry, but some experts say it was already anticipated. This is because the lock-up shares were released into the market, causing a temporary correction. There are other stocks that may also experience price declines like this in the future. Let's take a look at what lock-up is and which stocks might be subject to it.

What is lock-up release?

Lock-up = Voluntary Holding Obligation = Mandatory Holding

These terms all mean the same thing. Lock-up refers to the restriction that prevents the sale of shares for a certain period after a new stock listing. It is a system that restricts major shareholders or large shareholders from selling shares for a set period during events such as new listings on the KOSPI or KOSDAQ markets, mergers and acquisitions, or rights offerings. It acts as a kind of protective shield for individual investors.

Without this system, if the stock price temporarily surges after listing, institutional or foreign investors might sell off their shares all at once, flooding the market and causing significant losses for individual investors.

How long does the lock-up period usually last?

The lock-up period is typically divided into 15 days, 1 month, 3 months, or 6 months. This can be confirmed through public disclosures. For example, if the lock-up period is one month, shares are released around one month after listing, often causing a temporary drop in stock price due to the influx of shares. When KakaoBank was listed in August last year, its stock price fell about 10% one month after the lock-up was lifted. SK Biopharm also experienced a sharp drop of over 8% when shares equivalent to 6.3% of total stock were released.

Recently, due to investors learning from past experiences of price drops after lock-up releases, it is not uncommon to see stock prices decline even before the lock-up period officially ends.

How can I check the status of lock-up shares?

You can check by searching the company name on the Electronic Disclosure System (DART). Among the disclosures, look for the report titled 'Securities Issuance Performance Report' and check the section on 'Subscription and Allocation Details.'

Are there stocks with lock-up releases after Chuseok?

On the first trading day after Chuseok, the 13th, lock-up shares of Moa Data (6 months) and YM Tech (1 year) will be released. The release volume for Moa Data corresponds to 0.02% of total listed shares, about 6,000 shares, and YM Tech's release volume is 0.55%, about 60,000 shares. On the 14th, IoFlow's 2-year lock-up shares will be released, with a massive 15.98%, or 4,842,900 shares, entering the market. On the 16th, NPD's (2 years 6 months) 32.04%, or 6.9 million shares, will be released. On the 19th, Beomhan Fuel Cell (3 months), Yuil Robotics (6 months), and Hyundai Heavy Industries (1 year) will release shares corresponding to 1.72%, 3.36%, and 3.93%, respectively. On the 20th, Bflysoft (3 months) and Olipass (3 years) will release shares amounting to 0.38% and 19.27%, respectively.

Other notable lock-up releases include Socar and Daesung Hitech on the 22nd, with 1-month lock-up shares being released at 5.17% and 12.8%, respectively. On the 23rd, Gonggu Woman's 6-month lock-up shares will also flood the market.

Last year, the stock market was booming, and the public offering market was active, attracting many individual investors aiming for a 'double jump' (first-day price surge). However, if you overlooked the lock-up period, you might be caught off guard by sudden price drops. Although prices often rebound after temporary corrections, panic selling due to ignorance of lock-up could cause you to miss out on profits despite successfully receiving public offering shares. We hope you make smart investments by being informed and prepared in advance.

Editor's Note[Beginner's Guide to Stocks] is a smart investment guide for 'Joorini' (stock + beginner). We will explain unfamiliar stock stories to beginners in a kind and easy-to-understand way.

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