Hong Kong-listed AI giant SenseTime shares plunge as lock-up expires

SenseTime saw its shares plummet as much as 51% on Thursday after a crucial lock-up period ended.

The company’s early and cornerstone investors, who together own 73% of the company’s share capital, are now allowed to sell shares since the lock-up period expired on Wednesday.

To ease the pressure on the stock price from the upcoming sell-off, before the market opened on Thursday, SenseTime issued an announcement saying that the management team unilaterally extended the lock-up period for 6 months, that is, they will not sell any shares before December 29, 2022.

The share price, however, began to decline at the opening bell and eventually dropped 46.77% to settle at HKD 3.13 apiece (USD 0.40), which was less than the IPO price of HKD 3.85.

Last December, the company’s shares jumped as much as 23% from their IPO price as they debuted on the Hong Kong stock exchange.

Previously, SenseTime and other Chinese tech companies have been blacklisted by the Trump administration for allegedly playing a role in developing Chinese security systems. During Biden’s tenure, the U.S. Treasury Department added SenseTime to a list of Chinese companies that U.S. investors cannot invest in.

SoftBank, Fidelity International, Silver Lake, and Tiger Global Management are among the international investors in the AI behemoth founded by Professor Tang Xiaoou of the Chinese University of Hong Kong.

In addition to being sanctioned by the U.S., SenseTime’s losses are also expanding. According to SenseTime’s financial report, its revenue in 2021 was RMB 4.7 billion yuan ( USD 701.53 billion), a year-over-year rise of 36%, while the losses widened to RMB 17.771 billion, a year-over-year increase of 41%.

Since its establishment in 2014, SenseTime has completed 12 rounds of financing, and its valuation has reached USD 13 billion before listing. As of the close of the Hong Kong stock market on Thursday, its market value was HKD 104.878 billion ( USD 13.36 billion).