Wall Street Breakfast
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Good morning! Here’s the latest in trending:Iran war: Global oil demand is on track to decline for the first time since 2020.Bets on margin: Polymarket (POLYMARKET) seeks a new offering in the U.S.Supply Chain Services: Amazon (AMZN) is going after customers of FedEx and UPS
Shares of South Korean semiconductor giant SK Hynix (SKHY) are set to start trading on the Nasdaq today, and the debut is making some serious waves. Priced at $149 per share, or raising a total of $26.5B, the American Depositary Receipt offering marks the largest-ever listing by a foreign company in the U.S. The issuance was even seven times oversubscribed, as the firm’s high-bandwidth memory chips continue to power the infrastructure of the AI revolution.Snapshot: SK Hynix has already been on a tear in its home country, where its market capitalization topped $1T on the Korean exchange in May (as did rival Samsung Electronics). Its stock price there more than tripled this year, with tech giants far and wide splashing hundreds of billions of dollars to power their AI dreams. The new cash from SK’s share sale in the U.S. is going straight into keeping up its manufacturing capacity by building new mega-fabs and purchasing expensive lithography equipment from ASML (ASML).The terminology can be confusing. SK Hynix’s (SKHY) capital raise in New York is being legally structured as a U.S. IPO that’s using American Depositary Receipts (ADRs) as the vehicle. Each ADR is equivalent to a tenth of a Seoul-traded common share and gives U.S. investors a way to buy SK shares without having to trade via an overseas stock exchange. It should also drive a valuation reset by eliminating the “Korea Discount,” or the systemic undervaluation of South Korean companies compared to their American peers, which generally trade at much higher price-to-earnings multiples.SA commentary: “SKHY is about 32% of the DRAM market (57% of HBM) and counts Nvidia (NVDA) as an anchor customer, providing it with 70% of its HBM supply. Its HBM revenue as a percent of total is about 14% vs. Micron (MU) at 11%, which may explain the slightly higher margins,” noted analyst Ricardo Fernandez. “Once SKHY is ADR listed, I believe it should close the valuation gap with Micron (MU) and perhaps earn a premium due to its larger market share.” (8 comments)
Here’s the latest Seeking Alpha analysis
The Most Dangerous Stock Market In The WorldDRAM Prices Likely To Drop 80%-90% In 3 YearsOracle: Frankly, A Once In A Lifetime OpportunitySandisk: The 0.08x PEG Is Correct, But It May Not LastAT&T: SpaceX Anxiety Has Created A Strong Buy Setup
What else is happening
Gas spikes, snacks tank: PepsiCo’s (PEP) consumer warning.Meta (META) explores options to monetize AI infrastructure.U.S. says no fresh attacks on Iran; technical talks continue.Volkswagen (VWAGY) aims to halve model lineup to cut costs.Yum Brands (YUM) Taco Bell has an ‘explosive’ PR problem.OPENAI, Google (GOOGL) sold AI models to blacklisted groups.Germany to buy Tomahawks to boost long-range strike capability.Netflix (NFLX) eyes new bundles to revive viewer engagement.Q2 PC shipments drop 4% Y/Y, hit by higher component costs.New Hampshire rejects first-ever bitcoin-backed municipal bond.
In Asia, Japan +1.2%. Hong Kong +0.6%. China -1%. India +1.1%.In Europe, at midday, London +0.1%. Paris +0.1%. Frankfurt +0.2%.Futures at 7:00, Dow +0.2%. S&P flat. Nasdaq -0.4%. Crude -0.1% to $71.98. Gold -0.5% to $4,118.30. Bitcoin +2.4% to $64,384.Ten-year Treasury Yield -2 bps to 4.54%
On The Calendar
Companies reporting today include Delta Air Lines (DAL).See the full earnings calendar on Seeking Alpha, as well as today’s economic calendar
Wall Street Breakfast
Wall Street Breakfast, Seeking Alpha’s flagship daily business newsletter, is a one-page summary that gives you a rapid overview of the day’s key financial news. It is designed for easy readability on the site or by email (including mobile devices) and is published before 7:30 AM ET every market day. Wall Street Breakfast’s readership of more than 1 million subscribers includes many from the investment banking and fund management industries. Sign up here to receive the Wall Street Breakfast in your inbox every business day.
