TLDR
- SK Hynix announced a $29 billion stock buyback plan, covering around 24.07 million shares over three months starting August 20.
- The company said it believes its value is “not fully reflected in its current stock price.”
- U.S.-listed ADRs rose nearly 4% to $161.67 Wednesday after falling 9% the prior day.
- SK Hynix will return more than 50% of free cash flow to shareholders, up from its previous “within 50%” target.
- The board also approved a plan to consider adding special dividends, with around 69 trillion won in net cash on hand.
SK Hynix’s U.S.-listed ADRs jumped 3.9% to $161.67 on Wednesday after the memory chip maker unveiled a massive share buyback program worth 40 trillion South Korean won, or roughly $29 billion.
The move came one day after the stock dropped 9%, and it pulled rival memory names higher too. Micron rose 0.7% and Sandisk gained 1.6%.
The buyback covers around 24.07 million shares and runs over three months, starting August 20. The company said it plans to fully cancel all repurchased shares.
SK Hynix said the decision was driven by its belief that its current stock price does not fully reflect the company’s value.
The company raised $26.5 billion when it listed its American depositary receipts last month. But the U.S. shares have struggled, sliding more than 8% through Tuesday’s close before Wednesday’s bounce.
That weakness has come as investors question how long the AI-driven demand surge for memory chips will hold up.
Shareholder Returns Get a Boost
SK Hynix also raised its shareholder return commitment. It said it would return more than 50% of free cash flow to shareholders, tightening its previous guidance of “within the range of 50%.”
The board also approved a plan to study the addition of special dividends. SK Hynix had around 69 trillion won in net cash at the end of the second quarter.
Canceling the repurchased shares, rather than holding them in treasury, reduces the total share count and can support the stock price going forward.
Market Context
Futures tracking the S&P 500 were roughly flat as the buyback news hit, meaning the move in SK Hynix stood out.
The size of the buyback is large even by global standards, coming in at nearly the full amount the company raised in its ADR listing last month.
SK Hynix’s Korean-listed shares were down 9.75% on Wednesday prior to the buyback announcement, making the rebound in its U.S. ADRs more striking.
The company said it has about 69 trillion won in net cash, giving it the financial firepower to follow through on the commitment.
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