AI giant goes into freefall as lockup period ends for key investors

Bloomberg and Caroline Zheng

Mainland artificial intelligence software giant SenseTime slumped up to 51 percent in Hong Kong yesterday after a six-month lock-up period expired following its initial public offering.

The tumble came despite some of its executives, including chief executive Xu Li, pledging to extend the lock-up of their shares until December 29.

SenseTime shares plunged as low as HK$2.91 apiece, the lowest ever and below its IPO price of HK$3.85 after a lock-up on 23.4 billion shares owned by cornerstone investors and shareholders expired on Wednesday.

SenseTime ended the day 47 percent down at HK$3.13.

Its cofounder, Tang Xiao'ou, saw almost half his fortune wiped out as his net worth plunged by about US$2.3 billion (HK$17.94 billion) to US$2.9 billion, based on the intraday share price, knocking him off a list of the world's 500 richest people. The Chinese University information engineering professor has a 21 percent stake.

Selling pressure is not off as the lockup period on another tranche is set to expire near the end of this year.

"There were concerns on growth outlook and earnings potential during the IPO. Also, early IPO investors should have been well aware of the potential risks and volatility due to potential US blacklists and bans," Bloomberg Intelligence strategist Marvin Chen said.

SenseTime relaunched its IPO here in December after a delay caused by the company's being put on a US investment blacklist. The AI giant surged up to 23 percent on debut.

Founded in 2014, SenseTime is best known for its facial recognition technology, with its main source of revenue coming from sales of software platforms.

It reported revenue of 4.7 billion yuan (HK$5.51 billion) and a loss of 6.9 billion yuan last year.

The firm was one of the highest-profile targets of sanctions from Washington aimed at containing China's tech rise. Like Huawei Technologies and Semiconductor Manufacturing International Corp, it is regarded as a national champion and leader in a burgeoning field considered key to establishing China's tech credentials globally.