To The Moon

The recent performance of MiniMax (HKEX: 1060) has sent shockwaves through the market, with its stock price plummeting by approximately 65% from its March peak. This dramatic reversal of fortune for a company once hailed as a market darling raises significant questions about its valuation and future prospects.

On June 9th, the share price of MiniMax dropped to HK$464.4, marking a single-day decline of nearly 9%. This stands in stark contrast to its performance earlier in the year, when it surged post-listing to a historic high of HK$1,330 in March, achieving a market capitalization exceeding HK$380 billion.

Hang Seng Tech Index Inclusion and Subsequent Decline

Market observers point to a troubling correlation with its recent inclusion in the Hang Seng Tech Index. The index adjustment, announced on May 22nd and effective June 8th, saw MiniMax and Zhipu AI added as constituents. During the window between the announcement and the effective date, when related ETFs typically build their positions, MiniMax's stock fell over 23%. Following the official inclusion, the decline accelerated, with the stock recording daily drops exceeding 8%.

Catalysts for the Sell-Off

The sharp downturn was triggered by the company's announcement of plans to seek a listing on the A-share STAR Market, having signed an advisory agreement with CITIC Securities. This move is interpreted by the market as a signal of urgent funding needs, casting doubt on its financial sustainability.

Financial reports reveal that while MiniMax's revenue grew nearly 159% year-over-year to approximately $80 million in 2025, its net loss attributable to shareholders widened to a staggering $1.87 billion. Cumulative losses from 2022 to 2025 approach $2.7 billion. A significant vulnerability is its revenue structure, with 67% derived from consumer-facing products like Conch AI and Talkie, which reported a gross margin of just 4.7% for the first three quarters of 2025. Analysts note the low switching costs for users in this segment and increasing regulatory scrutiny, making it difficult to build a durable competitive moat.

Commercial Strategy Draws Criticism

Beyond the A-share listing plans, recent commercial decisions have fueled investor discontent. The launch of its new M3 model, though technically impressive, was accompanied by a pricing controversy. The company's Chinese website listed a subscription price 28% higher than its international site, causing public backlash. Furthermore, a shift in billing from a "per-call" to a "per-token consumption" model for its "Token Plan" has led to user complaints of unexpectedly high usage, depleting monthly allowances in days. In a sector still embroiled in a price war, with competitors like DeepSeek and Xiaomi aggressively cutting API prices, these pricing issues are seen as a significant commercialization risk.

Looming Share Unlock Adds Pressure

A major overhang is the imminent expiration of post-IPO lock-up periods in July. An estimated 63% of MiniMax's Hong Kong-listed shares are set to become freely tradable, with financial investors holding over one-third of these unlocked shares. This creates substantial potential selling pressure, as financial investors typically have the strongest motivation to exit. In contrast, Zhipu AI faces a much smaller unlock of about 11.6% of its shares in the same period, with a significant portion held by state-backed cornerstone investors. History shows such large-scale unlocks in Hong Kong can be severe; for instance, Kuaishou's shares fell 15.3% on its unlock day in 2021, and SenseTime plunged nearly 47% in 2022.

Conclusion

Market concerns that the Hang Seng Tech Index's inclusion of small-float stocks like MiniMax and Zhipu AI would force index-tracking funds to buy at inflated prices have materialized. The mechanics of index rebalancing—where arbitrageurs front-run the changes and ETFs execute trades passively—appear to have systematically transferred risk to long-term holders, who bought near the peak only to face an immediate and steep decline.