SK Square's headquarters at T Tower. [SK Square]
SK Square's headquarters at T Tower. [SK Square]

"Please save us." "This is painful and exhausting." (Posts from SK Square shareholders)

SK Square's share price, which had surged on the coattails of SK hynix, has been cut nearly in half. After approaching 2.2 million won ($1,460) at the end of last month, the stock has since fallen to around the 1.4 million won level.

Investors who bought SK Square as a proxy for SK hynix have been venting their frustration online, with comments such as "Just stop falling already" and "I thought a war had broken out."

[Yonhap]
[Yonhap]

According to Korea Exchange, SK Square closed Friday up about 6 percent from Thursday at 1.41 million won. The stock had climbed as high as 2.19 million won during intraday trading on June 30 — a 17-fold surge from a previous low of around 130,000 won — drawing intense investor attention, only to tumble back to the 1.4 million won range in just over 10 days.

SK Square is SK Group's semiconductor, AI and ICT-focused investment holding company, spun off from SK Telecom in 2021. It rode SK hynix's rally as the global AI boom drove a surge in demand for AI chips. As the AI frenzy spread worldwide and demand for AI semiconductors soared, attention turned to SK Square as SK hynix's largest shareholder.

Three factors drew investors in particular: SK Square's position as SK hynix's largest shareholder with a 20.50 percent stake, expectations for shareholder return policies, and a lower entry barrier compared with SK hynix's share price.

The rally unraveled on July 1 (local time), however, when Meta — one of the biggest spenders on AI infrastructure — announced it would lease out its surplus computing resources to outside parties. The news sent AI infrastructure-related stocks, including SK hynix, into a sharp decline on fears that demand growth for AI servers, graphics processing units and memory chips could slow.

SK hynix [Yonhap]
SK hynix [Yonhap]

Expectations for a recovery remain, however. Starting this year, SK Square will add cash dividends on top of its existing share buyback and cancellation program. The market expects the company's annual shareholder returns to expand further, factoring in its full-year buyback plan of 110 billion won and growing dividend income from SK hynix.

Brokerage analysts also expect SK hynix's successful listing on the US Nasdaq to serve as a catalyst for SK Square's rebound. Several securities firms have raised their target prices for SK Square — BNK Securities to 1.8 million won, SK Securities to 1.85 million won, Yuanta Securities Korea to 2.1 million won and NH Investment to 2.7 million won.

Domestic investor interest has also been rising after SK hynix's American depositary receipt offering price was set at $149 per share, the second highest in history.

SK Securities said it expects institutional investor buying in SK Square to continue, as SK hynix's share price is likely to keep climbing on the back of its ADR issuance and expanded shareholder returns.


ko@heraldcorp.com