MiniMax slumps 4.5% as Citi slashes target to HKD533 on M3 concerns

MiniMax-W (00100.HK) fell 4.5% after Citi cut its price target 60% to HKD533 and placed the stock on a 30-day negative catalyst watch.

Citi said the company's recent share price correction and diverging performance reflect controversy surrounding the pricing of its M3 model launched in early June, as well as lukewarm market reception, while new models from industry leaders and Chinese peers have continued to impress. The broker maintained its Buy rating despite the cut.

The new target implies about 60% upside from Tuesday's opening level of around HKD332. Short selling accounted for 15.1% of turnover, or HKD70.9 million, on the prior trading day. Citi said negative sentiment, user retention rates and uncertainty over monetization models may pose headwinds in the short term.

The stock faces dual pressure from the M3 reception and the upcoming lock-up expiry on July 9, when 45% of outstanding shares become eligible for trading. Founder and strategic investors including Alibaba and miHoYo have voluntarily committed to a 12-month lock-up, which may partially cushion selling pressure. Citi said the upcoming Hailuo 3.0 AI video generation model could help reverse sentiment if it gains positive market feedback.

MiniMax is among six Hong Kong-listed companies facing lock-up expirations this week. Knowledge Atlas Technology will see 25.6 million shares freed from a six-month cornerstone investor lock-up on Wednesday, representing nearly 6% of its outstanding shares. The Chinese AI developer's stock has surged more than 1,200% since listing.

The broader Hong Kong market is bracing for a record wave of lock-up expirations. Goldman Sachs estimated that $274 billion worth of locked-up shares will be released over the next 12 months, a record high. Historically, prices dip 4% to 7% within three to six months of release, Goldman analysts said. Morgan Stanley analysts wrote that secondary selling pressure will be most concentrated in July and September, creating liquidity headwinds even when fundamentals remain intact.

The target cut signals that Citi sees limited near-term catalysts for MiniMax beyond the Hailuo 3.0 launch. Investors will watch for user retention data and monetization metrics in the coming weeks to gauge whether the company can regain momentum against better-funded competitors.

This article is for informational purposes only and does not constitute investment advice.