Author: Zhao Ying
South Korean data center company Elice plunged 32% on its first day of trading on the Kosdaq, becoming the latest casualty on the global list of failed AI computing infrastructure IPOs. The company, which calls itself a "neocloud" and is a rare case of an already profitable company, listed at a valuation that was only a fraction of its peers, yet still could not escape the sell-off, marking a shift in the market's pricing logic for AI data center assets from "growth expectations" to "capital expenditure."
Elice priced at the top of its offering range at 90,500 Korean won, raising 201 billion Korean won (about $151 million), and its market capitalization after listing slightly exceeded 1 trillion Korean won, making it the largest IPO on the Kosdaq this year. South Korean retail investors poured about 10.3 trillion Korean won (about $7.7 billion) in subscription funds into it, with retail oversubscription exceeding 400 times—equivalent to freezing funds about 51 times the entire offering size in accounts awaiting allocation.
But it collapsed at the open. The share price briefly climbed to about 78,000 Korean won (this high itself was still 14% below the offering price) before quickly diving, hitting a low of 61,400 Korean won, down 32% from the offering price; as of publication it was hovering near 62,900 Korean won, about 30% below the offering price, evaporating about 300 billion Korean won in market value in less than half an hour.
This is not an isolated case. Previously, Nvidia-backed Australian data center company Firmus withdrew its IPO after cutting its offering price by 25%, Nscale's $30 billion financing request was cut by investors by nearly half, and Blackstone-owned AirTrunk postponed its Singapore REIT listing.But unlike the similar companies that stumbled one after another before, Elice is actually a profitable company, with revenue surging 200% in its first half, an operating margin of about 30%, and a relatively moderate valuation. Yet none of these advantages prevented the market from voting with its feet.
This IPO's broken offering price further cements the market's systemic doubts about the AI data center sector. According to Bloomberg, Goldman Sachs analyst Rich Privorotsky recently noted in a research report that "the market is discovering that computing demand can grow exponentially, but the available capital to support that growth cannot expand in tandem."
Even the cheap, profitable one can't sell
Elice is an outlier among this batch of failures: it is actually making money. The prospectus shows that the company's first-half revenue surged 200% year-on-year to 34.4 billion Korean won, turned a profit with operating profit of 10.3 billion Korean won, and EBITDA increased more than 11-fold year-on-year to 23.2 billion Korean won. Douglas Kim of Smartkarma expects its 2026 revenue to grow another 83%, with an operating margin of about 33%.
Based on the IPO price, the company's valuation was about 14.5 times annualized revenue, and after the open it fell further to about 10 times. By comparison, Nscale once asked the public market for $3 billion at a price-to-sales ratio of about 107 times, while losing $1.02 billion in the first half. Elice is not a high-valuation bubble specimen, yet it still lost a third of its market value in the time it takes to drink a cup of coffee.
Kim Dojoon, chief executive of Zian Investment Management, believes market sentiment may have weakened due to the CoreWeave incident, but Elice's financial structure is completely different from CoreWeave's, and investors need not view it as particularly high-risk. Albert Yong of Petra Capital pointed out that sentiment in the AI infrastructure sector is highly volatile and often disconnected from fundamentals.
Rising cost of capital leaves neocloud model trapped by structural contradictions
Goldman Sachs analyst Rich Privorotsky's summary hits the nail on the head: the market is discovering that computing demand can grow exponentially, but the capital available to finance it cannot. Elice CEO Jae Won Kim acknowledged that the IPO proceeds will be used to build more AI data centers in South Korea and overseas, and that this IPO is to provide himself with the financial firepower to execute.
Elice CEO Jae Won Kim admitted in an interview with Bloomberg that the IPO proceeds will be used to build more AI data centers in South Korea and overseas. "We are betting heavily on becoming a global full-stack AI infrastructure leader, and the significance of this IPO is to provide ammunition for our execution."
Morgan Stanley's latest estimates show that the combined free cash flow of hyperscale cloud providers and neoclouds will reach its worst level in 2027, with the gap approaching $600 billion after accounting for leases—the year of the largest capital expenditure is also the year of the largest financing gap.Gartner further predicts that by 2030, cost pressures and the lack of differentiated business models will force more than 80% of neocloud providers to cease independent operations.
Financing costs are rising in tandem. Goldman Sachs economists expect the Bank of Korea to hold rates hawkishly this week, with a possible further 25 basis point hike in Q1 2027; Goldman Sachs estimates that global interest rates are already at their highest level since 2007. KEPCO, the Korea Electric Power Corporation with 210 trillion won (about $148 billion) in debt, is also seeking to raise electricity prices, further squeezing the most core electricity costs of data centers.
Global Data Center IPO Winter: The List of Setbacks Continues to Expand
Within just four weeks, global data center IPOs have repeatedly failed: SoftBank's SB Energy postponed its IPO on September 22 to raise funds for the world's largest data center; Nvidia-backed Firmus withdrew on October 8 after cutting its offering price by 25%; Blackstone's AirTrunk postponed its $1.5 billion Singapore REIT to 2027 on October 14; after Microsoft exited its UK deal, Nscale was asked by investors to cut its $30 billion fundraising request by nearly half; CoreWeave's stock price has halved from its May high, its bonds entered distressed territory last week, and CDS imply a roughly 63% probability of default within five years.
About 12 hours before Elice's market open, Goldman Sachs' Gabriela Borges upgraded CoreWeave to Buy but cut the target price from $139 to $106; her bullish thesis explicitly assumes the company expands by borrowing at a cost of about 10% (1,000 basis points). The market responded to this report with an almost immediate selloff.
The next to face the test is Firmus' Batam partner DayOne, which is still seeking to raise up to $5 billion through a U.S. listing and may launch its roadshow as early as this Wednesday—if the deal can still go through, it will become the next touchstone for observing whether this financing window has completely closed.
