With the six-month lock-up period approaching, even if the founder and management team announced that the lock-up commitment would be extended to December 29, 2022, it still did not change the situation in which Shangtang Technology slumped at the start of trading today.

On December 30, 2021, AI Unicorn Soup Technology was officially listed on the main board of the Hong Kong Stock Exchange. All pre-listing investors agreed on a stricter lock-up period, promising to lock up all 100 per cent of their shares for six months after listing, according to Shangtang's prospectus.

Shangtang shares fell sharply at the start of trading on June 30, falling nearly 48 per cent to HK $3.05a share as of more than 10:00 in the morning. Compared with the original offering price of HK $3.85, Shangtang Technology has fallen below its original offering price.

It should be pointed out that in the early morning of June 30, Shangtang Technology issued an announcement announcing that Xu Li, Wang Xiaogang, Xu Bing and some members of the management of the Group, in favour of the company, voluntarily promised not to sell Class B shares involved in the pre-IPO restricted shares adopted by the Company on November 1, 2016 before December 29, 2022. And Class B shares in respect of which the vested options have been exercised under the pre-IPO employee incentive Scheme (revised) adopted by the Company on 1 November 2016.

Ten days ago, Shangtang Technology also announced in an announcement that it had decided to adopt the 2022 restricted share unit plan to recognize, among other things, the contributions of participants and to encourage and retain participants. Under Chapter 17 of the listing rules, the 2022 restricted share Unit Scheme does not constitute a share option scheme and the adoption of the 2022 restricted share Unit Scheme does not require shareholder approval.

However, judging from the opening share price of Shangtang Technology today, the capital market is not convinced of the company's actions, and Shangtang Technology's share price has been hovering around 45%.

Why did the capital markets react so violently to the lifting of the ban?

As a matter of fact, this is not the first time that Shangtang Technology's share price has risen and fallen sharply. In the three trading days after Shangtang Technology officially landed in Hong Kong, the share price opened high and even doubled its offering price of HK $3.85, with a market capitalization as high as HK $300 billion.

As for the sharp rise and fall of Shangtang Technology's share price, a number of professional investors told Deep net that it was mainly due to liquidity rather than fundamentals. The early surge in share prices was mainly because liquidity was too small and institutional shareholders could control the market.

For the surge at the beginning of Shangtang's listing, Eric (a pseudonym), an executive director of a dollar fund, believes that among the liquidity factors, Shangtang's listing model is the key: "through low issuance ratio and controlling the size of the circulation market, we can achieve a situation where exotic goods can live. "

Specifically, the issue size of Shangtang is 1.5 billion shares, green shoes (over-allotment) is 225 million shares, the total issue size is 1.725 billion shares (accounting for about 5.1 per cent of the total shares). Among them, the cornerstone investors locked in 1.033 billion shares, and the remaining 692 million shares were negotiable. Of the 692 million shares, retail investors hold 150 million shares and national distribution institutions hold 542 million shares. On the other hand, Shanghai International, the veteran shareholder of Guomai, took about 236 million shares, while other shareholders took 86 million shares. "

Assuming that these old shareholders remain unchanged, the number of shares in real circulation may be about 370 million shares (about 1 per cent of the total number of shares).

Eric believes that the reason why it is not a fundamental factor, "on the one hand, it is difficult to evaluate the current valuation from the fundamentals, on the other hand, the oversubscription multiple of the international placement is only 1.5 times (this 1.5 times still includes the cornerstone, the actual data is even more bleak), so the recognition on the institutional side is general, which also proves the fundamentals. "

Shangtang was affected by the sanctions to make a secondary offering, more than half of the retail investors who were keen on trading withdrew, and the number of cornerstone investors with fewer transactions increased, and the liquidity of the stock naturally decreased. Subscriptions for Shangtang shares closed at 12:00 on December 23, and individual investor funds for Shangtang were HK $1.337 billion, according to data released by all 14 brokerages. The previous application, which was suspended on December 10, shrank 57 per cent to HK $3.08 billion. Fundraising by cornerstone investors rose rather than fell. The first batch of cornerstone investors subscribed to US $450 million, while the second batch of cornerstone investors subscribed to US $5.116 (about HK $3.99 billion), an increase of 13.7 per cent.

In this case, Shangtang's share price is easily influenced by short-term traders.

Lu Yanxia, Assistant Research Director of IDC China, also told Deep net: "from a business point of view, Shangtang's revenue is indeed the largest in AI, and its achievements in recent years are also relatively outstanding, and its position in the AI industry is beyond doubt. But the rise and fall of the stock market cannot be interpreted purely from a business point of view. "