2023-07-11 08:58:47
Enter 2023.07.11 17:58 Edit 2023.07.11 20:44 Ground A1
The ant that won the short sale… ‘Emperor’ Right Eco Pro
Individual net purchase of 1.7 trillion this year… Share price soared 848%After 16 years, KOSDAQ broke 1 million won intraday
Hedge fund managers betting on declines
On the 11th, the stock price of Ecopro closed at 976,000 won, up 1.14%. Contrary to the analysis of securities companies that it was overvalued, thanks to the buying trend of individual investors, when it exceeded 1 million won during the intraday the previous day, it is evaluated that the ‘Korean version of the GameStop movement’ has succeeded. Reporter Beomjun Kim
“An army of ants united in unity finally defeated the forces of short selling.”
When the stock price of Ecopro, a secondary battery material company, exceeded 1 million won and became the ‘Emperor’s stock (stock worth 1 million won per share), a celebration erupted in the online discussion room. On the other hand, hedge fund managers that bet on falling stock prices faced an emergency, such as suffering huge losses. Among investors, there is an evaluation that the anti-short selling movement, the so-called ‘Korean version of the GameStop movement’, has been successful.
Ecopro closed at 976,000 won on the KOSDAQ market on the 11th, up 1.14%. Ecopro rose to 1,015,000 won during the intraday the previous day, breaking the 1 million won line for the fifth time in the history of KOSDAQ stocks. It is the first emperor in 16 years since Dongil Steel recorded 1,102,800 won in September 2007. Ecopro is a holding company with Ecopro BM, which manufactures cathode materials, a key material for electric vehicle batteries, as subsidiaries. Thanks to the increase in demand for electric vehicles and the growth of the secondary battery industry, it soared 848% this year alone.
The record stock price rise is led by individual investors gathered on YouTube and Internet stock cafes. Individuals net bought Ecopro worth 1.72 trillion won this year. On the other hand, foreigners sold 936.5 billion won and institutions net sold 762.8 billion won.
Analysts say that the ‘short squeeze’ phenomenon also had an impact on the surge in EcoPro. A short squeeze refers to a phenomenon in which stock prices rise in the process of short-selling investors buying back shares to prevent a larger loss (short covering). The short sale balance of EcoPro was only 54 billion won at the beginning of this year, but it increased 23 times to 1.2509 trillion won on the 6th. This means that there are that many short sellers who bet on the decline of EcoPro.
A representative of an asset management company said, “A foreign manager even created a special team to ‘snipe’ EcoPro and suffered a huge loss following selling short.”
Running at a PER of 700x… “Ecopro’s prospects are in the realm of God” Securities companies also give up
Ant Corps vs. Short Seller ‘Great Blood Fight’
Securities companies have virtually given up on predicting or analyzing EcoPro’s stock price. It means that it has already exceeded the level that can be explained logically. Last April, Hana Securities warned of an overheated stock price and cut its target price to 455,000 won, but Ecopro’s share price more than doubled as if ridiculing it.
○Individuals who believe in famous YouTubers more than securities companies
Ecopro’s rapid rise began in earnest from last February. Park Soon-hyeok, former director of Geumyang, who is called ‘Battery Man’ appeared on YouTube and pointed out Ecopro and Ecopro BM as the biggest beneficiaries of the growth of the electric vehicle and secondary battery industry, sparking a rising trend. Ecopro’s share price, which skyrocketed to 769,000 won in early April, slowed down following warnings from domestic and foreign securities firms such as Goldman Sachs and Hana Securities overheating.
Hana Securities warned, “The market capitalization of Ecopro has exceeded the expected corporate value following five years,” and warned, “We must be vigilant once morest both hasty pursuit buying and avoidance.” Since then, the stock price of Ecopro, which had fallen to the early 500,000 won range, began to rise once more from the end of June. The surprise performance of Tesla, an American electric vehicle company, worked as a good news. On the 30th of last month, when the news that Tesla’s second-quarter vehicle delivery increased by 83% year-on-year to regarding 470,000 units, EcoPro soared 20.42%. The expectations of individual investors are not unreasonable. This is because the electric vehicle industry is growing rapidly, and the export path of China, Korea’s biggest competitor in the secondary battery industry, is virtually blocked due to the US-China trade conflict. Thanks to this, Ecopro’s operating profit increased more than sevenfold from 86 billion won in 2021 to 613.2 billion won last year.
However, even taking this into consideration, many say that the current share price has far exceeded the intrinsic value of the company. Currently, EcoPro’s price-to-earnings ratio (PER) is regarding 700 times. Even compared to other stocks in the same industry, such as POSCO Future M (267 times), LG Energy Solutions (166 times), and L&F (31 times), it is a much higher level. “The stock price is already at a level that cannot be explained theoretically,” said the head of a research center at a brokerage firm.
○ Will it be OCI or Celltrion?
The volume of short selling, which bets on the decline in EcoPro’s stock price, is exploding. As of the 6th, the balance sheet, which is known as the ‘short selling leading indicator’, reached 1.2509 trillion won. It has increased more than 23 times from 54 billion won at the beginning of this year. The increase has slowed since last month as some hedge funds, which suffered excessive losses, started short covering (repurchasing borrowed stocks), but it is still a large amount.
Prospects are raised that if the short selling bomb is overcome, the possibility that the stock price will rise further cannot be ruled out. If the stock price continues to rise, short-selling investors will short-cover to prevent a larger loss, which can cause a ‘short squeeze’ phenomenon in which the stock price soars even more. A recent example of a short squeeze is the US Gamestop. GameStop stock price soared more than 1000% in a month. A representative of an asset management company said, “A similar phenomenon appeared when Serome Technology and OCI surged in the past, but following that, many individual investors suffered damage following repeated declines.” It is possible to settle down in the market with the stock price level).”
Reporter Mansoo Choi [email protected]
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