WAVICE shares traded at 7,240 won in the KOSDAQ market at 2:15 p.m. on the 15th. The stock price fell by 3.34% (250 won) compared to the previous day. WAVICE, which manufactures gallium nitride (GaN) radio frequency (RF) semiconductor chips, was listed in October last year. As the demand forecast was successful, they set the public offering price at 15,000 won, exceeding the band (11,000 to 12,500 won). Excluding the early trading phase on the listing day, WAVICE has not exceeded the public offering price even once.
WAVICE is not the only one. According to the financial investment industry, among the newly listed stocks in the past three months, those whose public offering prices exceeded the desired range (band) performed worse than those that did not. The public offering price is determined after corporations and underwriters evaluate the company's value and present the band, followed by demand forecasting aimed at institutional investors. This implies that one should not decide to invest in rookie stocks just because the demand forecast was successful.
Despite considering differences based on the time of listing, stocks that exceeded the upper band performed worse. The closing price of stocks that exceeded the upper band on the listing day was, on average, 0.5% lower than the public offering price. In contrast, those below the lower band were, on average, 0.6% higher. A week after listing, while stocks below the lower band fell by 13.8%, stocks exceeding the upper band dropped by 20.4%. Even extending it to a month, the average stock price drop rate for stocks exceeding the upper band was 33.2%, while those below the lower band was 27.4%.
Looking at the price returns of these stocks, those exceeding the public offering price upper band were actually performing worse. Based on the previous day's closing price compared to the public offering price, the average decline rate for stocks exceeding the upper band was 21.5%. For the same criteria, stocks at the upper band showed an average of -12.3%, those at the lower band declined by an average of -4.5%, and those below the lower band saw an average decrease of -12%. Not only WAVICE, but also HanChem, Top Run Total Solution, and SUNGWOO set their public offering prices above the upper band, yet their current stock prices have halved.
Even considering the time of listing, stocks exceeding the upper band performed worse. On the listing day, the closing price of stocks exceeding the upper band was, on average, 0.5% lower than the public offering price. In contrast, stocks below the lower band were, on average, 0.6% higher. A week after listing, while stocks below the lower band fell by 13.8%, stocks exceeding the upper band dropped by 20.4%. Even extending this to a month, the average stock price drop rate for stocks exceeding the upper band was 33.2%, while for those below the lower band, it was 27.4%.
To exceed the upper band of the public offering price, there must be a significant number of institutions submitting high bids during the demand forecast. The problem is that instead of setting a lock-up period to secure public shares, the practice of submitting high bids without such constraints was prevalent. This seems to be behind the substantial declines in the stock prices of those exceeding the public offering price upper band after listing.
Regardless of the public offering price band, there were still many cases of poor stock performance after listing. Among the 30 companies, only 9, including WITS, Oncocross, and Onconic Therapeutics, have maintained stock prices above the public offering price. Theborn Korea has been below the public offering price since after Christmas last month, and CLOBOT, which surged due to the robot craze, is also still below the public offering price.
There are evaluations that the market has begun to normalize. A deputy director at an asset management company investing in public shares noted, “The overheating phase that peaked in the first half of last year has subsided somewhat,” and added, “If short selling resumes this year, I expect gung-ho investments will decrease further.”
Many corporations are expected to pursue IPOs this year as well. Heungkuk Securities estimated that the number of new listings in the KOSPI and KOSDAQ markets this year would reach 90, which is 16.9% (13 companies) more than last year's 77. During the same period, the total amount of funds raised is also expected to more than double, from 4.3 trillion won to 9.1 trillion won.
Choi Jong-kyung, a researcher at Heungkuk Securities, said, “The number of corporations in the stage of listing application receipt has continued a solid trend at 55 so far this year,” adding, “Considering that 49 corporations withdrew during the IPO process last year, there is a possibility they will attempt again this year.”