JPMorgan Chase & Co. NYSE:JPM, a Wall Street bank, has reduced its price target for MiniMax Group Inc., a Shanghai-based artificial intelligence model developer, for the second time in less than a week as concerns rise over dilution from the company's proposed fundraising. MiniMax shares fell as much as 18% on Monday, extending their decline from the March peak to more than 80%. JPMorgan lowered its target by another 20% after cutting it by 25% on Tuesday, while UBS Group AG also reduced its target by half on Sunday. Following the recent selloff, MiniMax's gain since its January listing has narrowed to approximately 40%.
MiniMax is seeking to raise as much as $2 billion through a combination of new shares and convertible bonds. The company plans to raise HK$9.5 billion, equivalent to around $1.2 billion, from a share placement and another HK$6.5 billion through zero-coupon convertible notes. JPMorgan analysts, including Olivia Xu, estimated that the placement and the bonds, assuming full conversion, would represent a combined 17% of MiniMax's total shares. The analysts noted that the financing could remove constraints on resources required for model training, but suggested that investors should weigh this benefit against the potential dilution and the limited immediate contribution to revenue growth.
Investor concerns had already increased after MiniMax halved the price of its most advanced M3 model only one week after its June launch, raising questions about the company's competitiveness. Selling pressure intensified further last week when shares held by major investors that participated in the company's initial public offering were released from a six-month restriction period. Analysts, including those from Citigroup Inc. NYSE:C and Goldman Sachs Group Inc. NYSE:GS, have lowered their targets, contributing to a one-third decline in the average price target since late May. MiniMax's recent performance contrasts with rival Knowledge Atlas Technology Joint Stock Co., whose shares have climbed more than 1,300% this year, suggesting that investors are assigning sharply different valuations to the two AI companies.