MiniMax Shares Slump After JPMorgan Cuts Target Price Further

MiniMax Group Inc.’s shares plunged, after JPMorgan Chase & Co. slashed the Chinese AI model maker’s price target for the second time in less than a week on value dilution concerns caused by fresh fundraising.

MiniMax slumped much as 18% on Monday, set for a third straight day of declines. The stock has lost more than 80% since its March high.

The selloff came after JPMorgan trimmed MiniMax’s target price by another 20%, after the Wall Street bank cut it by 25% on Tuesday. The AI model firm’s plan that emerged last week to raise as much as $2 billion from new shares and convertible bonds creates “meaningful dilution” for the stock, the broker’s analysts including Olivia Xuwrote in a note dated Sunday.

MiniMax’s stock has also been under pressure since late last week when a chunk of shares held by major investors that bought into its initial public offering were released from a six-month restriction period.

“The US$2 billion raise removes training resource constraints, but the two sides of the trade are not symmetric in time or certainty,” the JPMorgan analysts wrote. “Such near-term financial benefit needs to be weighed against share dilution and the limited immediate impact on revenue growth.”

MiniMax is seeking HK$9.5 billion ($1.2 billion) via selling new shares and HK$6.5 billion through zero-coupon convertible notes. The placement and the bonds, if fully converted, would represent a combined 17% of the company’s total shares, according to JPMorgan’s estimates.