Chinese artificial intelligence software maker SenseTime Group Inc (商湯科技) slumped as much as 51 percent in Hong Kong yesterday, after a lockup of its shares expired following its initial public offering.
The company dropped to trade at as low as HK$2.91 apiece, the lowest ever and below its initial public offering price of HK$3.85. A lockup on a portion of the stock owned by cornerstone investors and shareholders — amounting to 23.4 billion shares — expired on Wednesday.
“SenseTime’s average liquidity looks very low, and it’s also subject to US sanctions. That means its investor base is probably more concentrated, so the impact of lockup expiry is higher,” Union Bancaire Privee senior analyst Ling Vey-sern (凌煒森) said.
SenseTime joined a list of technology companies that have seen insiders selling their shares after a strong rebound since mid-March. This week, Tencent Holdings Ltd’s (騰訊) major backer said it would further cut its stake in the company.
JD Health International Inc (京東健康) controller Richard Liu (劉強東) in May sold his stake in the company.
Selling pressure is not removed for SenseTime, as another block of shares owned by its shareholders is set to expire near the end of this year, data showed.
The stock has rallied 18 percent since mid-April through Wednesday.
Selling pressure shows that stakeholders are not optimistic about SenseTime’s outlook, Bloomberg Intelligence strategist Marvin Chen said.
“There were concerns on growth outlook and earnings potential during the IPO. Also, early IPO investors in SenseTime should have been well aware of the potential risks and volatility due to potential US blacklists and bans,” Chen said.
SenseTime’s move should not have broad implications on China tech, he said.
China’s most valuable private AI firm, SenseTime was one of the highest-profile targets of sanctions from Washington aimed at containing China’s tech rise.
Like Huawei Technologies Co (華為) and Semiconductor Manufacturing International Corp (中芯), the company was regarded as a national champion, a leader in a burgeoning field considered key to establishing China’s tech credentials globally.
SenseTime’s plummet takes the on-paper loss for SoftBank’s Vision Fund, which holds about 4.7 billion shares, to about US$1.5 billion, Redex Research analyst Kirk Boodry estimated.
SenseTime secured funding from nine cornerstone investors, including state-backed Mixed Ownership Reform Fund (混合所有制改革基金) and Shanghai Xuhui Capital Investment Co (上海徐匯資本投資), Bloomberg reported in December.
SenseTime went public at the end of December after the original share-sale schedule was derailed by a US Department of the Treasury move to sanction the company for its alleged role in creating facial-recognition software used in the oppression of Uighur Muslims in China’s Xinjiang region.
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