(Bloomberg) — A little-known Chinese pipemaker erased all of its dizzying rally from last week after announcing plans to sell 1 million shares at a massive discount to a pair of institutional investors.
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Huadi International Group sank 91% Monday for its biggest drop on record, after an agreement to sell its stock to investors at $25 per share — an 86% discount to Friday’s closing price. This comes after the stock skyrocketed 716% last week amid volatile trading.
The company erased last week’s rally on news of the offering, falling to close at $15.81. Shares closed Friday at $180. The stock sale will raise the same amount of cash as Huadi’s January 2021 initial public offering. Univest Securities served as placement agent for Monday’s registered direct offering.
The Wenzhou, China-based company that makes stainless steel pipes and tubes went public in 2021 without much fanfare, raising $25 million in capital. Since then it had surged about 2,150% through Friday’s close to give it a market value of more than $2.3 billion. Monday’s plunge takes Huadi’s market cap to about $209 million.
Last week’s rally was punctuated by a jump on Thursday that more than tripled its value on a plan to enter the clean energy space. The company doesn’t have any coverage among Wall Street analysts, according to Bloomberg data.
China stocks listed in the US broadly rallied last week on optimism over reopening hopes and progress in the American audit inspection of firms. Huadi is not the only China or Hong Kong-based stock making a sharp move Monday.
GigaCloud Technology, a Hong Kong-based online marketplace provider, surged 27% on Monday, with more than 32 million shares traded.
(Updates throughout to market close.)
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