South Korean AI infrastructure company Elice plummeted 32% below its IPO price on its first day of trading on the Kosdaq market.

Foreign media outlets, including Bloomberg, reported that the sluggish market debut of Elice is intensifying debates surrounding the valuations and profitability of AI companies.

Elice, which made its debut on the Kosdaq market on October 20, finished its first trading session at 61,500 won, down 32.04% from its initial public offering (IPO) price of 90,500 won.

The IPO size was approximately $150 million, translating to over 200 billion won.

Bloomberg reported that "Elice, a company little known outside the South Korean market, has found itself at the center of the debate over the valuation and actual performance of AI enterprises."

US investment publication Barron's also covered the sharp decline of Elice under the headline that an IPO disaster from South Korea has exposed vulnerabilities in the AI investment frenzy.

Elice is a cloud company that provides the computing resources necessary for AI training and service operations.

Its business model involves making massive upfront investments in GPUs and data centers, and then recovering those funds by charging corporate clients usage fees.

The problem lay in the timing of the listing.

Since October 6, when Elice finalized its IPO price, a wave of selling pressure has swept through semiconductor and AI infrastructure-related stocks in global stock markets.

Doubts have grown over whether the AI industry, despite its growth, can actually generate profits matching the enormous investment costs.

Despite increased sales and improved profitability in the first half of the year, Elice failed to calm investor anxieties.

News of the steep drop in Elice also became a talking point in the US stock market.

US CNBC host Jim Cramer wrote on his social media that "Elice, a company we've never even heard of, failed in its South Korean IPO, dragging down the share prices of other companies," adding that "it shows how fragile the sector is."

In fact, US AI cloud provider CoreWeave dropped about 6% intraday yesterday, and other AI-related companies such as Nebius also showed weak trends.

Ipek Ozkardeskaya, an analyst at Swissquote, told Reuters that "the recent sell-off in semiconductor stocks has damaged investment sentiment," analyzing that "the sluggish market debut is a clear warning to AI companies planning to go public in the future."

Experts pointed out that companies must prove not only growth prospects of increasing AI demand, but also actual sales and the feasibility of recovering investments.

Reported by Kim Minjeong | Video by Kim Gi-hyeon | Graphics by Yang Hye-min | Produced by SBS Digital News