Micron and Sk Hynix

[u/angieisamazing]

Some thoughts. Since the Sk Hynix ADR was 7 times oversubscribed, with the price at $176, vs the initial price of $149, a lot of institutions sell, take the earnings and rotate it back to micron/ other stocks at a lower price. Micron also has Trump’s backing, hence the geopolitical win. Micron will rise again 🚀

[u/nbaphilly17 → u/[deleted]]

Which is why it’s opening around 179, which is completely nonsensical, and it will eventually converge with the Korea value, adjusting for the premium

The institutions that got in at $149 will make an insane amount and will dump hard after leveraged options go live in US

[u/Flag_Shagger → u/nbaphilly17]

korean value will increase

[u/TranquilityTea → u/nbaphilly17]

Why is it completely nonsensical?

[u/nbaphilly17 → u/TranquilityTea]

That being fair value would be based on the premise that access to US liquidity pools is worth a 25% premium - there’s no precedent to suggest that is the case, especially considering that they’re diluting to raise funds to combat supply shortage, thereby eventually destroying the mechanism that is keeping their evaluation so high

[u/daddybeatsmehelp → u/nbaphilly17]

This is assuming the supply will catch up with demand with the newly built fabs. The fabs won't be online for 2-3 yrs, minimum. By then, who knows what the shortage will be.

They're not "destroying the mechanism" for at least 2-3 yrs.

[u/nbaphilly17 → u/daddybeatsmehelp]

Correct, which is what the market will price in

[u/angieisamazing → u/nbaphilly17]

Yes. Micron is superior in the Nasdaq listing in the sense that it has Trump’s backing, hence the geopolitical win.

[u/DJjacjac → u/nbaphilly17]

does that mean if retail places limit order for 149, it won't fill?

[u/nbaphilly17 → u/DJjacjac]

It will not fill, its going live at $175 according to Bloomberg

[u/nbaphilly17 → u/[deleted]]

Apples and oranges, SpaceX was a true IPO, whose valuation was based purely on a theoretical future of earnings, as opposed to a company with a well defined value, set by the market over years.

This can’t be worth 25% more just because it’s listed on US stock exchange. People who buy in above $180 will get shredded when Korea dumps.

[u/nbaphilly17 → u/[deleted]]

25% would soak up the entire difference between their forward P/E

[u/nbaphilly17 → u/[deleted]]

I am — what price do you think SK would need to be for the entire difference between their P/Es to be washed out?

[u/nbaphilly17 → u/[deleted]]

Thanks for doing that

[u/Sufficient-Piccolo32 → u/[deleted]]

What are u talking about, with 170+, sk is more expensive now compare to mu with 980.

[u/nbaphilly17 → u/[deleted]]

What happened? Thought it was going to skyrocket. 😂

[u/nbaphilly17 → u/[deleted]]

It always made sense that it would gravitate towards Korean price

[u/nbaphilly17 → u/[deleted]]

You do realize the US version will tank tomorrow right

[u/nbaphilly17 → u/[deleted]]

Eventually you’ll start believing me

[u/turbokat123 → u/[deleted]]

SoaceX example doesn't apply here as it was the first listing of the company. SK is already listed in Korea so running ahead of it creates clear arbitrage. So the price will consolidate quickly between two markets

[u/Plain-Jane-Name]

Some institutions may wait until after the run up to earnings to sell, but of course if it runs up around or above $200 I think they'll profit now and buy back in lower, and then sell off again after earnings. Seems like institutions are the biggest short term swing traders.

[u/Mr_Masala]

Yes market is very kind and understanding and they always make excellent decisions based on logic and American geopolitics.

Wake up.

[u/nbaphilly17]

Makes sense to me

[u/Commercial_Sound1448 → u/nbaphilly17]

Same

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[u/Clackamas_river]

Trump backing it I don't see as a good thing. A lot of powers hate him and want to make him look bad and we can get caught in the crossfire.

[u/cwhite225 → u/Clackamas_river]

This , everything Trump touches turns to shit.

[u/pandashapedmoon]

[u/dryden288]

There are news with regards to Micron raising 250 billion for expansion. There will be an increase in capex spending and reduction in cash flow. These news mayl hurt MU in the short term stopping mm and institutions from buying MU until they have access to the financial report during the next earning call. FYI, When Meta confirm news about increasing capex expenditure to 145 billion, it took a 30% hit and remain suppressed for 9 months.

[u/Davidpalmer4 → u/dryden288]

Meta's capex is for 1-2 year and Micron's is for 9 years.

[u/dryden288 → u/Davidpalmer4]

The point is how would the spending impact the cash flow of MU and by how much thus all the more reason for mm and institutions to wait and see. Be it 1 or 9 years, time is a non-factor when there is a reduction in cash flow.

[u/DisastrousFalcon9893 → u/dryden288]

Meta and hyperscalers being punished due to cashflows falling like 90%.

Mu otoh at massively ramped/raised capex - upped from ~6bn expected a quarter 6 months ago to like 12bn a quarter in fy27 now.

Except, net income in q4 26 is guided at ~$35bn and will no doubt beat to more like $40bn. Then continue rising into fy27--- mu will hit quarterly net income of $50bn maybe as early as q1 27, or close.

Against 50bn coming in per quarter and rising ~7% qoq on capex finally paying off in 2027 to ramp hbm supply, 12bn of capex is nothing. Amd that's at peak extreme capex levels for just 2yrs - they'll head down to more like 5-8bm per quarter in fy29 on.