Why Is SKHY Stock Surging Over 6% In Overnight Trading?

• SK Hynix will return about 100 trillion won (about $75.4 billion) to shareholders this year through dividends, share repurchases and cancellations.
• The results bolster hopes for sustained profits and could support SKHY and memory chip stocks amid a difficult stretch.
• Retail sentiment for SKHY shifted to ‘extremely bullish’ from ‘bullish.’

SK Hynix reported record results and announced over $23 billion in dividends and buybacks, sending its shares higher and boosting retail trader sentiment. The memory chip major also said it had sold out of ​DRAM and HBM chips until 2029 and that chip shortages will continue through 2030.

SK Hynix’s Seoul-listed shares rose over 8% Wednesday morning local time, pushing South Korea’s benchmark Kospi nearly 6% higher. U.S.-listed SKHY gained 6.6% in overnight trading late Tuesday.

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SK Hynix Shareholder Returns Plan

The Icheon, South Korea-based company said it would return 100 trillion won (about $75.4 billion) to shareholders this year through dividends, share buybacks, and cancellations.

The figure includes more than 30 trillion won in dividends and another 20 trillion won in share buybacks, on top of its 40 trillion won buyback program, announced in August, which it has already completed.

“Through this, the company intends to fulfill its commitment to return 50% or more of free cash flow (FCF). Of this, the 40 trillion won share repurchase announced in August was completed last week, and the shares will be canceled shortly,” the company said in a statement.

SK Hynix’s Record Q3

Quarterly revenue rose 328% year over year and 32% sequentially to ​104.6 trillion won in the July to September period, compared to analysts' expectation of 98.34 trillion won.

Operating profit surged 632% from 76.72 trillion won a year ago to 83.33 trillion won, versus expectations of 76.72 trillion won.

SK Hynix said it ⁠signed long-term agreements (LTAs) with 14 major customers, while "proactively discussing with a number of customers the possibility of extending the contract terms, which are typically five years.”

The results bolster hopes for sustained profits from a surge in memory demand and could support SKHY and memory chip stocks amid a difficult stretch globally. SKHY is down 21% so far this month as of the last close.

Retail View On SKHY

SKHY was the top trending ticker on Stocktwits at the time of writing, with retail sentiment shifting to ‘extremely bullish’ from ‘bullish’ the previous day.  

“$SKHY Hold your diamond guys! if you sell your shares now just for a small profit, you can’t find them with this low price anymore,” a trader wrote.

Many traders expect significant long-term potential in the stock, especially given that it currently trades below the Nasdaq listing price. “$SKHY let’s not forget, $149 - $150 was (the) IPO price, and $171 was first trade… and this was $195 just 2-3 weeks ago. So, there’s plenty of room to run,” one said.

As of the last close, SKHY is 2.5% below its July listing price. 

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