Hong Kong's stock market staged a strong rebound on July 20, with the Hang Seng Index closing up 580 points or 2.36%, and the Hang Seng Tech Index also rising 2.79%. However, the leading AI model company, Zhipu AI (02513.HK), did not follow the broader trend, closing down 19.56% for the day at HKD 890.5. Another player in the AI model space, MiniMax-W (00100.HK), also fell 10.6% to HKD 191, hitting a new closing low.

This marks the third consecutive trading day of significant declines for Zhipu AI, with previous sessions seeing drops of 9.31% and 28.49%, bringing the cumulative three-day loss close to 50%. The stock has retreated over 70% from its all-time high of HKD 2980.

Share Price Collapse Inflicts Heavy Losses on Investors

Zhipu AI listed on the Hong Kong Stock Exchange on January 8, 2026, at an issue price of HKD 116.2 per share, becoming the "world's first listed large AI model company." Its share price subsequently soared, reaching an intraday all-time high of HKD 2980 on June 22, representing a gain of over 24 times the IPO price and briefly pushing its total market capitalization above HKD 1.33 trillion.

The turning point arrived in July. On July 8, Zhipu AI saw its first major post-listing lock-up expiration, with approximately 25.68 million shares held by 11 cornerstone investors becoming freely tradable, representing about 5.76% of the company's total share capital. Based on the previous day's closing price, the unlocked shares were worth over HKD 40 billion. Although nearly 70% of cornerstone investors had expressed intentions to hold long-term before the expiration, the market's supply-demand balance was disrupted.

On July 17, Zhipu AI's stock price plunged 28.49%, setting a new record for its largest single-day decline since listing, closing at HKD 1107. On July 20, the price further broke below the key HKD 1000 level. As of the close, Zhipu AI's total market cap had fallen to approximately HKD 414.6 billion, a reduction of about 70% from its historical peak.

Notably, shortly after the lock-up expiration, Zhipu AI announced on July 9 a placement of up to 19.78 million new H shares at HKD 1588 per share, raising a total of about HKD 31.41 billion, marking the largest single placement fundraising by a Hong Kong-listed tech company this year. This placement was completed on July 13.

The placement price of HKD 1588 represented a discount of approximately 12.99% to the July 8 closing price of HKD 1825. However, just a week later, Zhipu AI's stock price had fallen to HKD 890.5, leaving institutions that participated in the placement with paper losses exceeding 43%. The identities of these investors who participated at the elevated price have not yet been publicly disclosed.

Institutions Remain Bullish, But Near-Term Valuation Pressure Persists

Market analysis suggests Zhipu AI's sharp decline is the result of multiple converging factors. The first is a severe disconnect between valuation and fundamentals. Experts point out that Zhipu AI's price-to-sales ratio once exceeded 1000 times, with its high valuation lacking profit support. Financial reports show that in 2025, Zhipu AI's revenue was only CNY 724 million, a year-on-year increase of 131.9%, but its adjusted net loss reached CNY 3.182 billion, a loss equivalent to 4.39 times its total revenue for the same period. Annual R&D expenditure was as high as CNY 3.18 billion. Analysts believe this sharp fall essentially represents a shift in the AI industry's pricing logic from "scarcity premium" to "fundamentals-based pricing."

The second factor is the expansion of the tradable share float due to the large-scale lock-up expiration and placement. Before the expiration, Zhipu AI's freely tradable shares in the market numbered only 11.74 million, with scarcity amplifying the stock price to some extent. After the July expiration, the number of freely tradable shares surged dramatically. Coupled with the completion of the approximately HKD 31.4 billion placement in early July, the paper losses for participating institutions have further amplified selling pressure.

The third factor is changes in the competitive landscape of the industry. On July 17, Moonshot AI officially released its open-source model Kimi K3, with a parameter scale of 2.8 trillion, making it the world's largest open-source model by parameters. This has led to market adjustments in expectations for the competitive dynamics among large AI model companies. Goldman Sachs also warned of intensifying competition in the high-end programming field in the second half of the year.

Additionally, recent new AI regulatory measures introduced by the U.S. government, strengthening controls over the release and licensing of frontier AI models, have further heightened market concerns about the AI sector.

Despite the sharp share price decline, investment banks' ratings on Zhipu AI remain predominantly "Buy." Over the past 90 days, seven investment banks have issued Buy ratings with an average target price of HKD 1539.25. J.P. Morgan raised its target price from HKD 2000 to HKD 2400, maintaining an "Overweight" rating; UBS significantly raised its target to HKD 2200; CLSA raised its target to HKD 2061; Goldman Sachs gave a "Neutral" rating with a target of HKD 1880. Guotou Securities (Hong Kong) in its latest research report gave a Buy rating with a target price of HKD 2043.

However, market views on the subsequent trend remain divided. Experts note that the company will face an even larger lock-up expiration in January 2027, when approximately 40% of original shares will become freely tradable. Near-term valuation pressure persists, while the long-term direction of the share price will depend on the realization of its technological advantages and commercialization profitability.