Elice plunges 32% on debut, then hits upper limit — but stays below IPO price

Elice, an AI infrastructure company that debuted on the Kosdaq market with a valuation of 1 trillion won ($753 million) based on its IPO price, plunged 32 percent on its first day of trading before surging to the daily upper limit the following session. Its share price, however, remains below the offering price. Major international media outlets have focused on the debut-day crash, diagnosing it as a sign that debate is intensifying over the high valuations and investment risks surrounding global AI infrastructure companies.

According to Korea Exchange, Elice was trading at 79,900 won as of 9:25 a.m. Wednesday, up 18,400 won, or 29.92 percent, from the previous session. The stock hit the daily upper limit immediately after the opening bell. The rebound came one day after shares closed at 61,500 won on Tuesday — a 32.04 percent drop from the IPO price of 90,500 won.

Even at the upper limit, the stock remains 11.71 percent below the offering price. Market capitalization stood at 889.2 billion won.

Selling pressure from foreign and institutional investors dominated the first day of trading. On Tuesday, retail investors net purchased 46.34 billion won worth of Elice shares, while foreign investors net sold 9.05 billion won and institutions net sold 35.36 billion won. By Wednesday, foreign investors had turned net buyers early in the session, with net purchases of 1.28 billion won as of 9:18 a.m.

Founded in 2015, Elice started as an AI coding and education platform before expanding into what the industry calls a "neo-cloud" company — one that provides modular data centers and GPU-based cloud services. The company handles everything from data center design and construction to operations in-house.

Its flagship product, the AI prefabricated modular data center, is marketed on the strength of faster build times and higher power efficiency compared with conventional facilities. According to Kiwoom Securities, traditional data centers take 24 to 36 months to build, while Elice's modular centers can be up and running in three to six months. Cloud services accounted for 76.2 percent of the company's revenue in the first half of this year.

Earnings have been on an upward trajectory. Last year, Elice posted sales of 39.5 billion won and operating profit of 5.2 billion won. In the first half of this year alone, it recorded sales of 34.3 billion won and operating profit of 10.3 billion won — with first-half operating profit already approaching double the full-year figure for last year.

Investor enthusiasm ahead of the listing was strong. Elice drew a 388.84-to-1 competition ratio in its institutional book-building process, allowing it to set the IPO price at the top of its indicative range of 70,400 to 90,500 won. The retail subscription round drew a 408-to-1 ratio, with about 10.26 trillion won in subscription deposits. The expected market capitalization at the IPO price was 1.01 trillion won.

The debut-day crash, however, reignited debate over the lofty valuations assigned to AI infrastructure companies. Bloomberg reported Tuesday (local time) that the plunge illustrated waning investor confidence in so-called neo-cloud companies — firms that operate data centers specialized for AI computing.

Reuters also reported that the first-day collapse deepened investor concerns about AI capital spending. Barron's, the American financial magazine, used the Elice case to argue that rapid revenue growth alone is no longer enough to dispel worries about high valuations and the burden of future fundraising for AI companies.

Across the global AI infrastructure sector, the financing pressures that come with large-scale investment are weighing on sentiment. US AI cloud company CoreWeave faces mounting concerns over its heavy debt load, while some data center firms — including Australia's Parmeus Grid and AirTrunk — have withdrawn or postponed their IPO plans.

For Elice, securing the capital needed for future data center expansion and winning private-sector customers remain key challenges. The company plans to expand its current data center in the greater Seoul area from 4 MW to 10 MW of power capacity by year-end, and to build a 40 MW infrastructure facility in the Honam region.

In an Oct. 1 report, Kiwoom Securities analyst Kim Hak-jun said Elice's IPO price range was calculated by applying an enterprise value-to-EBITDA multiple of 16.85 to 22.64 times to trailing 12-month EBITDA of 39 billion won. He projected that earnings growth driven by expanding AI infrastructure investment and government sovereign AI budget disbursements would underpin the company's valuation going forward.

Kim cautioned, however, that "as government projects, which currently make up the bulk of cloud revenue, transition toward private-sector AI cloud contracts, there will need to be a process of confirming customer growth." He added that "demand for fundraising to support additional infrastructure investment could persist, so investors should be mindful of heightened volatility."