Following a steep decline last Friday, KNOWLEDGE ATLAS (02513.HK) shares have experienced another significant drop today, falling 19.56%. The trading volume for the stock reached HK$11.091 billion.

At the close of the trading session, the share price settled at HK$890.5, representing a decrease of HK$216.5 per share from the previous day. The company's market capitalisation now stands at HK$414.6 billion.

This latest decline wiped out approximately HK$116.7 billion in market value. Combined with the previous trading day's loss of over HK$200 billion, the total market value erosion over just two sessions exceeds HK$300 billion.

Recent Placement Results in Substantial Paper Losses

The company, which went public on the Hong Kong Stock Exchange on January 8, 2026, recently concluded a substantial share placement. The placement, completed on July 13, 2026, involved issuing shares at HK$1,588 each, raising a total of HK$31.4 billion.

In a remarkably short period, investors who participated in this placement are now facing paper losses of approximately 43.9%. The identity of the investors who subscribed at such elevated price levels remains unclear.

Post-Lockup Period Pressure and High Insider Returns

The recent sharp decline in the share price coincides with the company's entry into the post-lockup period. While some cornerstone investors have indicated they are not in a hurry to sell their holdings, this does not guarantee they will abstain from selling indefinitely.

Eleven cornerstone investors participated in the initial public offering, subscribing for a total of HK$2.98 billion. Since the lockup expiry, the company's valuation has retreated significantly from its peak, with the share price now down about 60% from its highest point when the market cap briefly touched HK$1 trillion.

Even at the current depressed price level, these cornerstone investors are still sitting on substantial paper gains exceeding 666%. With such high returns, the incentive for them to consider profit-taking is significant. Furthermore, with the current share price, the cost for a standard board lot trade approaches HK$90,000, placing it out of reach for many retail investors.

Intense Competition and Fundraising in the AI Sector

The company operates in a fiercely competitive large language model market. Competitors are actively raising capital and advancing their technologies. For instance, Kimi recently unveiled its K3 model and has reportedly raised over $3 billion in less than a year.

Concurrently, DeepSeek completed a funding round of 50 billion yuan, achieving a valuation of 350 billion yuan. Reports suggest DeepSeek is already engaging with new investors for another funding round, targeting a pre-money valuation of around $71 billion.

Other recently listed peers in the sector are also facing pressure. Minimax shares closed at HK$193.1 today, down 10.6%, giving the company a market capitalisation of approximately HK$67.4 billion. Minimax also recently completed a combined placement and bond issuance raising a total of HK$16 billion.