SK Hynix or SpaceX, Will SpaceX’s Listing Siphon SK Hynix’s Liquidity?

TradingKey - Earlier reports indicated that Elon Musk's SpaceX plans to launch a roadshow in June, aiming for the largest IPO in history with a fundraising target of $75 billion; meanwhile, South Korean memory chip giant SK Hynix has also targeted a listing window between June and July, intending to raise approximately $10 billion in the U.S. via ADRs.

The market is concerned about whether SpaceX, as the largest IPO in history, will create a siphon effect on the capital attractiveness of SK Hynix's listing. Observers previously noted that OpenAI and Anthropic scheduled their IPOs for the second half of the year, staggering their timelines with SpaceX. This move suggests management's intention to avoid a shock to market liquidity and better attract available capital.

SK Hynix's simultaneous listing means the two fundraising events will occur almost concurrently, with both companies competing for the same pool of global institutional investors. Every dollar committed to SpaceX's share subscription represents an equivalent amount that cannot be allocated to SK Hynix's ADR placement.

To understand whether SK Hynix will be affected by SpaceX, investors should first grasp the underlying logic of SK Hynix's U.S. listing.

Why is SK Hynix choosing to list in the US?

Narrowing the valuation gap with its U.S. peers is a primary driver behind SK Hynix's decision to list in the United States, representing a core logic for the move.

Based on earnings forecasts for this year, the securities industry has assigned SK Hynix a forward P/E ratio of only 3 to 4 times, compared with 8 times for Micron Technology and as high as 19 times for SanDisk.

Due to the abundant liquidity of the U.S. market, SK Hynix can achieve a higher valuation premium by listing in the U.S., provided that overall sector valuations remain within a rational range. Currently, the performance of companies in the U.S. memory chip sector has significantly outperformed market expectations; despite the continuous rise in share prices, valuations remain within a reasonable and normal range.

Has SpaceX weakened market appetite for allocating to SK Hynix ADRs?

From the perspective of market expectations, SpaceX's listing schedule has moved ahead of SK Hynix, meaning global capital attention will be locked in by June, leaving an extremely narrow window for SK Hynix.

Several investment bankers have clearly expressed concerns that SpaceX's concentrated absorption of capital and market attention in the short term could squeeze the issuance space for other companies; while there is precedent—a similar capital concentration effect occurred during Meta's listing in 2012—SpaceX's scale this time is several times larger.

A large volume of institutional capital pursuing global allocation may prioritize subscribing to SpaceX, a "phenomenal asset," rather than SK Hynix's ADRs.

In addition, the retail allocation for SpaceX's IPO has hit a record high among listed companies, making this IPO a breakthrough arrangement for retail investors. SpaceX CFO Bret Johnsen stated: "Retail will be the core of this IPO, with a proportion exceeding any major listing in history."

In contrast, SK Hynix cannot seek funding from the retail side, as its ADR issuance is primarily targeted at institutions, with limited retail participation.

For SK Hynix, this dual capital siphoning from both institutional and individual investors means its ADR issuance may simultaneously face a double diversion of liquidity.

It should be noted that the "Fast Entry" mechanism, previously described as "tailor-made for SpaceX," could lead to the company being quickly included in mainstream index systems after its listing.

The rules of this mechanism indicate that newly listed companies undergo a market capitalization evaluation on the seventh trading day; if the total market value ranks among the top 40 of the Nasdaq 100 Index, the stock could be officially included in the index as early as the close of the 15th trading day, at which point a large volume of passive capital will automatically allocate to this super large-cap stock.

What key areas of SK Hynix should investors focus on?

First, from the perspective of the sectors they represent, the appetite for long-term capital allocation differs significantly between the two; SK Hynix possesses confirmed orders and market pricing power for its products.

Faced with the memory chip shortage, institutions expect the scarcity to persist until 2030, meaning that SK Hynix and the broader memory sector will continue to grow rapidly until then. Compared to the previous market expectation of a P/E ratio of only 3 to 4 times, its deterministic growth potential as a market 'shovelseller' remains immense.

Meanwhile, SpaceX's valuation is derived more from future development potential, and its post-IPO valuation will depend heavily on future uncertainties. Since the rationales for long-term capital allocation differ, institutional conviction capital is unlikely to see an outflow from this perspective.

On the other hand, although SK Hynix is affected by the siphoning of short-term capital by SpaceX, given the significant valuation gap between its forward P/E ratio and the current U.S. memory sector, an IPO could still prompt passive buying from some sector-specific long-term allocation funds, bringing its valuation back to the sector average.

Furthermore, as the industry is notably cyclical, investors should remain cautious and monitor whether SK Hynix's financial results signal sustained high growth, which will be the primary indicator for maintaining its growth stock valuation.