SK Hynix, Market Cap Drops by 8.6 Trillion Won... Shares Plunge Over 9% for Second Consecutive Day

by Jang Hyowon

Published 05 Aug.2024 16:16(KST)

[Image source=Yonhap News]

SK Hynix experienced a sharp decline of around 9%, wiping out approximately 8.6 trillion KRW in market capitalization.

On the 5th, SK Hynix closed at 156,100 KRW, down 17,100 KRW (9.87%) from the previous day. This is the lowest price since February 22. SK Hynix also recorded a double-digit decline on the 2nd, known as "Black Friday."

The last time SK Hynix saw a decline of around 9% was during the US credit rating downgrade in 2011 and the COVID-19 shock in March 2020. A double-digit drop was last seen on November 18, 2008, following the US financial crisis, when SK Hynix plunged 11.17%.

This recent plunge is interpreted as being influenced by fears of a US-led economic recession and concerns over an artificial intelligence (AI) bubble. The sharp declines in stocks of companies like Nvidia, which have been leading the US stock market, amid bubble concerns, also appear to have weighed on the KOSPI index.

However, experts believe that SK Hynix's fundamental strength remains intact. SK Hynix announced that its consolidated operating profit for the second quarter of this year is preliminarily estimated at 5.4685 trillion KRW, turning profitable compared to an operating loss of 2.8821 trillion KRW in the same period last year.

Han Dong-hee, a researcher at SK Securities, analyzed, "The strength of high-bandwidth memory (HBM) is part of a profit growth cycle, and while investment sentiment toward AI may fluctuate, it is unlikely that the trend will disappear in the second year of AI server investment. Attention should also be paid to the rapidly increasing stable profit base through long-term supply contracts."