A new $5 billion funding round has been completed, yet the stock price keeps falling. On the evening of September 13, Z.AI (02513.HK) announced the closure of an approximately $5 billion financing round, comprising $2 billion in share placement and $3 billion in convertible bonds. The capital has arrived, but the market remains unimpressed.

When trading opened on September 14, Z.AI shares gapped down sharply, at one point plunging more than 10% to an intraday low of HK$710, breaking below the HK$714 placement price for this round. The stock closed at HK$720, down 9.21% for the day. To put this in perspective, when the stock hit its June peak, Z.AI shares surged to HK$2,980, pushing the market capitalization above HK$1 trillion at one stage. Now, the stock sits at HK$720, having shed 75% of its value in just three months.

What stands out most in this funding round is the pricing. The placement price of HK$714 per share stands in stark contrast to the HK$1,588 per share placement from just two months earlier in July. Within two months, the placement price has been cut in half. Institutions that entered during the July round are now sitting on paper losses of approximately 54.6% based on the current share price. For the six placement subscribers, their holdings have shrunk by more than half in under six months. Long-standing shareholders remain trapped, while new capital queues up at half the price.

The pace of fundraising is even more concerning. On January 8 this year, Z.AI listed on the Hong Kong Stock Exchange as the first global large-model AI stock globally, with an IPO price of HK$116.2 and raising approximately HK$4.348 billion. The stock closed up 13.17% on its first trading day, giving it a market capitalization of HK$57.9 billion. Then, in mid-July, the company raised approximately $4 billion (equivalent to HK$31.375 billion) through a placement. Just two months later, it secured another $5 billion. Since its listing eight months ago, the company's cumulative fundraising has exceeded HK$75 billion, setting records for Hong Kong tech stocks in both speed and scale.

However, the fundraising pace cannot keep up with the rate of cash burn. According to calculations by Yicai, Z.AI's IPO raised approximately HK$4.9 billion, essentially depleted within eight months. The HK$31.375 billion from the July placement saw HK$10.955 billion deployed within just 50 days of receipt, translating to a daily average burn of approximately HK$220 million. By comparison, the daily burn during the IPO phase was only HK$20.4 million. From a monthly average of HK$600 million to a daily average of HK$220 million, the cash burn rate has accelerated more than tenfold.

Who is absorbing the discounted placement? A closer look at this $5 billion financing structure reveals key details. The placement component was priced at HK$714 per share, a discount of approximately 9.96% to the HK$793 closing price before the announcement, with the placement shares representing about 4.5% of the enlarged issued share capital. The convertible bond portion carries a zero-coupon structure with a conversion price of HK$892.5, representing a 25% premium to the placement price. The equity dilution resulting from this discounted placement is the immediate cause of the share price pressure. A placement discount of nearly 10% means existing shareholders' stakes are directly diluted. Short-term arbitrageurs and panic sellers have rushed out together, leaving the stock price unable to hold its ground.

Some market analysts describe this financing as a deal struck under duress. The convertible bonds have a maturity of only one year, expiring in September 2027. If the share price fails to reach HK$892.5 by then, investors hold the right to demand the company redeem the bonds. One year is simply insufficient time to transition from bond issuance to ramping up capital expenditure and finally realizing returns. Moreover, the substantial capital expenditure will generate amortization costs in the short term, which actually works against improving the financial statements. The fact that lenders have compressed the borrowing period to just one year suggests the market is becoming increasingly demanding toward AI financing. Z.AI's bargaining position is indeed not strong.

That said, Z.AI is not without achievements. In the first half of 2026, the company generated revenue of RMB 954 million, representing year-on-year growth of nearly 400%, surpassing its full-year total from last year. Net loss narrowed by 12.1% year-on-year to RMB 2.07 billion. The most significant shift lies in the business structure. Revenue from the MaaS open platform and API business reached RMB 825 million, growing 2,736% year-on-year, with its share of total revenue surging from 15.2% in the same period last year to 86.5%. In other words, Z.AI is transitioning from a localized deployment model of selling models and services to a cloud-based MaaS model of selling tokens. This is the industry's mainstream path, with roughly 85% of Anthropic's revenue also derived from API business. As of the end of August, the MaaS platform's annualized recurring revenue reached $1.6 billion, up 60% from early July. Token call volume has grown more than 40-fold since the beginning of the year. Furthermore, the average selling price of APIs has increased by approximately 101%, indicating that revenue growth is not achieved by cutting prices to expand volume, but rather through simultaneous price and volume increases.

The numbers look solid, so why is the market still not buying in? A key metric to consider is the market capitalization-to-ARR ratio. Z.AI's current market capitalization stands at approximately HK$335.7 billion. With ARR of $1.6 billion, equivalent to roughly HK$12.5 billion, the market cap-to-ARR ratio is approximately 27 times. Comparatively, Anthropic's ARR has reached $65 billion, with market consensus placing its IPO valuation around $2 trillion, translating to a market cap-to-ARR ratio of roughly 30 times. Viewed this way, Z.AI's valuation is not unreasonable. However, the issue is that Anthropic's ARR is 40 times that of Z.AI, and its growth certainty and customer stickiness are simply not in the same league. If Z.AI can truly push its ARR to the management's year-end target of $2.4 billion, the market cap-to-ARR ratio would dilute to around 20 times, easing valuation pressure. But the time window is only one year. Within twelve months, the stock price needs to climb back above HK$892.5 while also withstanding the financial statement pressure stemming from capital expenditure. That is no easy feat.

The large-model AI race leaves no room for stagnation. Z.AI's competitors are far from idle. Moonshot AI has already initiated its Hong Kong IPO process with a pre-investment valuation of approximately $50 billion. DeepSeek is undergoing Star Market IPO guidance with a pre-investment valuation of roughly $75 billion. Z.AI's current market capitalization of about HK$335.7 billion, equivalent to approximately $43 billion, does not hold an advantage among peers. Furthermore, the gap in capital expenditure between Z.AI and its competitors is stark. In the first half of 2026, capital expenditure was only RMB 390 million, barely a fraction of what rivals are spending. To maintain a position in the top tier of large-model AI companies, frugality alone will not suffice.

Z.AI is also advancing its Star Market IPO plan, intending to raise RMB 15 billion. Fundraising occurs first in Hong Kong, then the A-share market. This serial fundraising shows no end in sight in the near term. Put simply, financing itself is not the issue; the real question is whether Z.AI can deliver results after raising the funds. A member of the management team stated at the earnings call that the goal for the next-generation GLM-6.0 is self-evolution, enabling the model to recognize when to stop and when to self-correct. This direction makes sense. But technological exploration requires time, the convertible bonds mature in just one year, and the patience of long-standing shareholders is wearing thin.