Half of newly listed stocks in 2023 valued lower than IPO price

Representatives from S. Biomedics, a cell therapy products developer, the Korea Exchange (KRX) and other relevant parties celebrate the intital public offering (IPO) of the company on the Kosdaq secondary bourse in Yeouido, Seoul, May 4. Yonhap

Half of the shares of firms that are newly listed on the stock market are traded lower than their initial public offering (IPO) prices, data showed, Tuesday.

The finding, according to industry sources, adds to concerns over the IPO market that was rattled by the suspected fraudulent IPO of Fadu, a fabless semiconductor startup, in August.

According to financial data provider FnGuide, 31 of the 61 stocks that made IPO debuts this year were valued lower than their IPO prices as of Nov. 15.

Of the 31, two were from the benchmark KOSPI and the remaining 29 were from the Kosdaq secondary bourse.

S. Biomedics, a cell therapy products developer, struggled with the steepest price fall.

While its post-IPO market capitalization was forecast to reach as high as 198 billion won ($152 million), it dropped 59.17 percent compared to May 4 when it made its Kosdaq debut.

Two other companies also saw their stock values decline by more than half their original value since their IPOs. They were Sigetronics, a semiconductor materials manufacturer that retreated 51.04 percent, and CUBOX, an artificial intelligence (AI)-based face recognition tech startup that slid by 50 percent.

Virnect, an extended reality (XR) software developer, went down 48.81 percent.

The disappointing performances of the newly listed firms cast doubts over the IPO market following the suspicious activities around Fadu.

The company faces claims that it exaggerated its 2023 performance outlook, and thus inflicted losses on its investors after it was listed on the Kosdaq in August.

It estimated its annual sales at more than double last year's to reach 120.2 billion won this year.

Instead, sales in the first three quarters combined dropped 44.6 percent year-on-year to 18.04 billion won, meaning it has only a slim chance to reach its forecast.

Under the circumstances, financial regulators are anticipated to raise barriers for companies interested in going public so as to protect investors, the sources said. Accordingly, relevant firms are likely to delay their IPOs to ensure they meet the qualifications.