[Beginner's Guide] Executive Selling a Signal of Peak? Will Ecopro Become the Second Kakao?

Editor's Note[Beginner's Guide to Stock Investing] is a smart investment guide for 'Joorini' (stock + beginner). We will kindly and easily explain stock stories that are unfamiliar to beginners.

This year, it is no exaggeration to say that the hot issue in our stock market is 'secondary batteries'.

Among them, especially 'EcoPro' surged by 457.28% just this year (January 2 to April 21), becoming the top contributor to the rise of KOSDAQ.

However, recently, the stock price trend of 'EcoPro' has been suspicious.

While the securities industry has expressed concerns about EcoPro, individual investors have continued their buying rally.

Through the electronic disclosure system, there are concerns that the real peak signal has come as an EcoPro executive's stock sale was disclosed.

Let's take a look at whether the executive's sale is really a signal of a stock price decline, and whether EcoPro will become the second Kakao, which caused a 'scam controversy' by insiders selling stocks using insider information.

Investors 'Shaken' by EcoPro Executive Sales

On the first trading day of this year, January 2, the stock prices of EcoPro and EcoPro BM were 103,000 KRW and 92,100 KRW, respectively.

As of the most recent trading day, April 21, the stock prices of EcoPro and EcoPro BM recorded 574,000 KRW and 272,500 KRW, respectively.

During this period, EcoPro and EcoPro BM recorded increases of 457.28% and 195.87%, respectively.

Despite the public perception that the stock price was overvalued compared to the corporate value, EcoPro's stock price, which had been rising, recorded an intraday high of 820,000 KRW on April 11 and has steadily declined to close at 574,000 KRW on April 21.

This is about a 30% drop from the peak.

EcoPro BM also recorded an intraday high of 315,500 KRW on April 10, and after fluctuations, closed at 272,500 KRW on April 21, about 14% lower than the peak.

The stock prices of EcoPro Group stocks, which were expected to rise endlessly, are recently undergoing a correction.

The background is that there are talks that stock sales by insiders familiar with the company's internal affairs may have influenced the stock price decline.

According to the Financial Supervisory Service's electronic disclosure system, it was confirmed that Park, Executive Director of Management Control at EcoPro, sold 1,924 shares on the market on the 13th. The disposal price was 607,604 KRW per share, totaling 1,169,030,000 KRW.

The reason for the sale was stated as 'extension of mortgage loan.'

Earlier, on the 10th, it was revealed that Heo, CEO of EcoPro AP, an affiliate of EcoPro BM, sold 11,220 shares of EcoPro BM at 285,995 KRW per share.

Also, Kim, an outside director of EcoPro HN, was confirmed to have sold 500 shares at 298,000 KRW on the 12th.

Last month, Kim Byung-hoon, CEO of EcoPro, sold 21,000 shares and 5,000 shares of EcoPro BM on February 28 and March 8, respectively, on the market.

Is Executive Sale a Peak Signal?

Investors are unsettled by executive sales because sales by executives, who are usually well-informed insiders, are perceived as a signal of a peak.

This is not only the case with EcoPro Group stocks.

Companies whose stock prices have surged without exception have seen insider executive sales.

Mirae Company attracted attention by recording consecutive daily limit-ups on February 28 and March 2.

Coincidentally, over these two days of limit-ups, Kim Jun-hong, a special relation (brother) of the largest shareholder Kim Jun-gu, sold all 382,481 shares held on the market, cashing out a total of 13,719,930,000 KRW.

Not only KOSDAQ-listed companies but also large companies listed on the KOSPI market are the same.

Last year, Doosan Enerbility's stock price surged sharply under the theme of 'Taejo-Ibangwon (solar power, shipbuilding, secondary batteries, defense, nuclear power)'.

Accordingly, the largest shareholder, Doosan Co., sold part of its stake by block deal (off-hours large volume trading) of 2,854 common shares of Doosan Enerbility at 20,050 KRW per share.

Before the block deal, Doosan Enerbility executives sold their own shares at prices close to the peak, causing controversy.

Executive Director Jin sold 5,000 common shares at 20,200 KRW per share on the market, and Vice President Park also sold 3,300 shares at 20,800 KRW per share on the market.

Currently, Doosan Enerbility's stock price closed at 18,410 KRW on April 21.

Will It Become the Second Kakao?

Investors' views on EcoPro Group stocks are only anxious.

Of course, there is no disagreement that it is a growth industry and the outlook is bright, but the rapid surge in stock prices in a short period, along with insider sales, raises concerns that only individual investors holding stocks may suffer losses.

This anxiety is also due to the previous 'Kakao incident.'

At the end of 2021, after Kakao Pay's stock price formed a level of 200,000 KRW, more than twice the IPO price of 90,000 KRW within one month of listing, the management sold a large number of shares, causing the stock price to plummet.

At that time, Kakao Pay's stock price dropped sharply after the disclosure of management's stock option exercise and sales, and the decline deepened due to a bear market, falling well below the IPO price.

Therefore, among investors, there is some anxiety that insider sales of EcoPro Group stocks might make it the 'second Kakao.'

On the other hand, some believe that the sales by EcoPro executives account for less than 1% of the total circulating shares and are limited to some executives, so the market impact will not be as significant as the Kakao Pay incident.

Dear Joorini investors,

There is nothing more rewarding and joyful than investing in promising industries and sharing the fruits of growth with the company and investors.

However, if the executives responsible for managing the company exploit information asymmetry to benefit themselves rather than investors, it would be very disappointing and discouraging for investors.

Especially, despite the hardships experienced in the Kakao incident, the repetition of such events indicates that our capital market is still immature.

There is no guarantee that such incidents will not recur, but as individual investors and as one myself, I will continue to watch, act, and raise voices to make executives more aware.

Today, I support the wise investments of all Joorini investors.

If this article was helpful, please press 'Like' and 'Subscribe' once each. Thank you.

This article is from [Beginner's Guide to Stock Investing], published weekly by Asia Economy. We explain stock-related financial news and difficult economic stories in an easy and friendly way so that stock beginners can understand. By subscribing, you can receive articles for free.

☞Subscribe

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