(Bloomberg) -- A company backed by the mother of Asia pop megastar Jay Chou saw its stock tumble by a record 72% Wednesday, with no immediately apparent reason.
The slide took shares of Star Plus Legend Holdings Ltd. below their initial public offering price for the first time since their July 2023 listing in Hong Kong. Volume was 49 times the three-month daily average.
The company is known for retailing products closely associated with the Taiwanese singer, including Modong, a “bulletproof” high-fat coffee drink. Started by Chou’s mother Yeh Hui-Mei and others in 2017, Star Plus Legend also sells skin- and health-care products and provides intellectual property.
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“Given the company’s earlier strong stock performance, some early investors may have realized significant gains. Combined with recent market volatility and pressure on the Hang Seng Index, this has led to some profit-taking,” the company said in a written response to Bloomberg News Wednesday late afternoon.
The stock price impact is “likely to be temporary,” the company said, adding that it is “actively evaluating the current conditions and will consider taking further steps, if necessary, to stabilize the market and safeguard the interests of all shareholders.”
With a market capitalization of around $1 billion at the start of the week, China-based Star Plus Legend’s shares have lost three-quarters of their value in three days. The stock is covered by only three analysts, who all rate it a buy.
Wild swings are not uncommon in small, little-covered stocks. Shares of graphite maker Sanergy Group Ltd. plunged 98% one day earlier this month in Hong Kong after a regulator’s warning about shareholding concentration and margin-unwind trades.
Star Plus’s revenue for the first six months of the year grew 76% from a year earlier to 267 million yuan ($38 million).
(Updates with closing price in first paragraph, and company response in fourth and fifth paragraphs.)
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