Data centre infrastructure firm Elice’s 33% plunge in ‘ugly debut’ rekindles AI spending doubts

[SEOUL] Shares of data centre infrastructure company Elice plunged in their trading debut, underscoring lingering concerns about whether the artificial intelligence 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 per cent in early trading, before paring the losses slightly.

That was an abrupt downturn after the company raised 201 billion won (US$151 million) in an initial public offering 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 towards the AI investment boom improved.

Rather than reinforcing confidence, the quick plunge rekindled swirling concerns that have particularly impacted data centre companies, with some high-profile recent setbacks around the world.

Firmus Grid cancelled its Sydney IPO in October 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. 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’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 is facing pushback over its target IPO valuation, Bloomberg News reported.

“Elice’s roughly 30 per cent 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 program 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 data centre 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 1 trillion won. The shares sank to 61,000 won in early Tuesday (Oct 20) trading on the tech-heavy Kosdaq market, before rebounding to about 64,000 won.

South Korea tightens scrutiny of new listings

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’s unit Solidigm would constitute a “duplicate listing”, a structure in which a company already owned by a plublicly traded parent lists its shares separately.

Critics argue that such deals can disavantage 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 US,” 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 roughly 10.3 trillion won into subscription deposits in hopes of buying shares.

But if the 33 per cent drop holds, it would become the worst-ever debut after a Korea IPO that raised at least US$100 million, surpassing the 30 per cent plunge by W-Scope Chungju Plant 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 above the illustration.

A user on X posted a screenshot of a 68,255 won position, down 24.75 per cent, on the day, saying: “This is the first time I’ve lost money on an IPO.”

Another investor wrote that the stock “ruined Korean stocks and crypto”, to which a comment said “I just want Elice to go away to Wonderland”.

“Retail investors may have blindly 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 per cent 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 times to 23.2 billion won.

The company is expected to record an 83 per cent sales jump in 2026 and an operating margin of about 33 per cent, analyst Douglas Kim wrote in a note on Smartkarma.

Elice’s financial structure is different from CoreWeave’s, and investors do not need to view the company as “particularly risky”, said Kim Dojoon, chief executive officer at Zian Investment Management. But, he added, “It remains to be seen whether the company can maintain its current profitability”.

A successful offering could have helped break an IPO drought in South Korea, where the primary market has been in the doldrums as fundraising surged across Asia.

First-time listings in Seoul have raised US$1.4 billion in 2026, compared with more than US$3 billion in each of the previous three years, according to Bloomberg-compiled data. Meanwhile, SK Hynix completed the biggest-ever US share sale by a foreign company.

Elice’s IPO was the biggest on the Kosdaq in 2026 and surpassed in Korea only by the US$337 million offering of K Bank in March.

Backed by venture capital firms including Vertex Ventures and Altos Ventures, Elice plans to use its IPO proceeds to build more AI data centres around South Korea and abroad, according to chief executive officer Jae Won-kim. Mirae Asset Securities and Samsung Securities served as lead underwriters.

“We’re going all-in on becoming a full-stack AI infrastructure leader globally,” Kim said in an interview. “This IPO is about giving ourselves the financial firepower to execute.” BLOOMBERG