SEOUL: Shares of data-centre (DC) infrastructure company Elice Inc have plunged in their trading debut, underscoring lingering concerns if the artificial intelligence (AI) boom can justify the billions of dollars being poured into the industry.
The Seoul-based neocloud service provider’s shares fell as much as 33% in early trading, before paring the losses slightly.
That was an abrupt downturn after the company raised 201 billion won (US$151mil) in an initial public offering (IPO) priced at the top of the marketed range, with the retail tranche 400 times subscribed.
The sell-off threatened to undermine a tentative recovery in Asian stocks, which had been buoyed by a rebound in US chipmakers as sentiment toward the AI investment boom improved.
Rather than reinforcing confidence, the quick plunge rekindled swirling concerns that have particularly impacted DC companies, with some high-profile recent setbacks around the world.
Firmus Grid Ltd cancelled its Sydney IPO this month after investors balked at its valuation.
“It’s not a good sign, especially after Firmus pulled its IPO,” said Josh Gilbert, lead analyst for Asia Pacific and Middle East at eToro Ltd. The “ugly debut” of Elice “hasn’t helped the dynamic in Asia today”.
Concerns over borrowing costs, fierce competition and long-term returns from massive AI-related spending have soured investor appetite for the sector.
Coreweave Inc’s shares have more than halved since their May peak, AirTrunk is delaying a planned IPO of a real estate investment trust, people familiar with the matter have said, while Nscale Ltd is facing pushback over its target IPO valuation, Bloomberg News reported.
“Elice’s roughly 30% drop at its IPO also hurts sentiment, signalling the environment surrounding neocloud companies has yet to fully improve,” said Kazuyuki Muramatsu, head of investment management at Nagomi Capital.
Founded in 2015 by three students in the doctorate programme of KAIST, one of the country’s top technology universities, Elice began as a coding education platform before pivoting to AI cloud infrastructure, supplying products including servers, liquid-cooled chips, cloud and networking equipment and software.
The company has since developed a modular DC platform with high-density power systems and advanced liquid cooling designed for high-performance AI chip clusters.
Elice sold its shares in the IPO at 90,500 won apiece, for a post-listing market capitalisation exceeding one trillion won.
The shares sank to 61,000 won in yesterday’s trading on the tech-heavy Kosdaq market, before rebounding to 64,000 won.
The pressure on investor sentiment is against the backdrop of South Korea also weighing tighter scrutiny of new listings.
Authorities are examining whether a proposed US IPO of SK Hynix Inc’s unit Solidigm would constitute a “duplicate listing”, a structure in which a company already own by a publicly traded parent lists its shares separately.
Critics argue that such deals can disadvantage existing shareholders by allowing a subsidiary’s value to be unlocked separately. The debate adds another layer of uncertainty for companies seeking to tap public markets.
“Elice’s debut comes at a time when sentiment toward AI infrastructure companies has weakened, particularly in the United States,” said Albert Yong, managing partner and chief investment officer at Petra Capital Management.
“Sentiment toward AI infrastructure has been highly volatile and often disconnected from underlying fundamentals.”
Elice was able to generate demand among South Korean retail investors, who poured 10.3 trillion won into subscription deposits in hopes of buying shares.
But if the 33% drop holds, it would become the worst-ever debut after a South Korea IPO that raised at least US$100mil, surpassing the 30% plunge by W-Scope Chungju Plant Co in 2022.
The stock’s plunge sent shockwaves across South Korea’s retail investment community, known as ants.
On Toss Securities’ popular mobile app, one poster shared an illustration of Alice –spelled similar to Elice in Korean – in Wonderland, smashing ants with a large hammer. “All ants are dying,” the post said.
A user on X posted a screenshot of a 68,255 won position, down 24.75%, on the day, saying: “This is the first time I’ve lost money on an IPO.”
Another investor wrote that the stock “ruined South Korean stocks and crypto” to which a comment said “I just want Elice to go away to Wonderland.”
“Retail investors may have believed that IPO stocks would always go up,” said Jo Hyunik, an investment division manager at Seoul-based Iroom Investment Advisors.
To win over investors, Elice touted a 200% surge in first-half revenue to 34.4 billion won, according to its prospectus.
The company swung to an operating profit of 10.3 billion won, while earnings before interest, taxes, depreciation and amortisation jumped more than 11-fold to 23.2 billion won.
It is expected to record an 83% sales jump in 2026 and an operating margin of 33%, analyst Douglas Kim wrote on Smartkarma. — Bloomberg
