[Exclusive] "Forecasts of Over 10 Billion, but Only 100 Million Earned"... 95% Followed This Pattern: Why Are KOSDAQ Special Exception IPOs Inflated? [KOSDAQ Inflated IPOs]①

Last Year, 95% of KOSDAQ Special Listings Inflated Earnings Estimates for the Same Year
Only 2 out of 37 Special Listings Matched Projected and Actual Figures
Authorities Issue Repeated Warnings, but "Overhyped Earnings" Persist

Among the 69 companies newly listed on the KOSDAQ market last year (excluding SPACs), only 2 out of the 37 companies that set their public offering price based on future estimated performance achieved the estimated 2025 performance. Getty Images

It has been revealed that the practice of inflating initial public offering (IPO) prices in the KOSDAQ market based on overly optimistic future earnings projections continues unabated. Concerns are growing that, if shares are listed at high prices based on excessive estimates and then the stock price declines, the losses may ultimately fall squarely on individual investors who purchase shares later. This has led to calls for proactive regulatory reform.

Analysis of 37 newly listed KOSDAQ companies last year that set their IPO price based on projected future earnings

According to data submitted to lawmaker Kang Junhyeon’s office by the Financial Supervisory Service on October 6, out of the 69 companies (excluding SPACs) that newly listed on the KOSDAQ market last year, only 2 among the 37 companies that set their offering price based on future estimated performance actually achieved the projected 2025 performance. Even then, both of these companies had gone public after November of last year, meaning that most of their annual performance had already been recorded, which made hitting their forecasts possible.

Suspicions have been raised that most of the companies listing their expected future earnings at IPO significantly overstated their estimates in their securities registration statements. All 37 companies listed through special exceptions—34 under the technology special listing system and 3 under the unprofitable companies exception. Introduced in 2005, the technology exception listing system eases listing requirements so that innovative companies with strong technology and growth potential, but unable to generate stable profits in the short term, can raise capital through a KOSDAQ listing.

Due to the nature of these exception listings, most are loss-making companies; thus, their corporate value is assessed based on projected future performance, which also determines the public offering price. However, the problem is that IPO decisions are often made based on these future projections rather than historical performance or profitability, leading to a longstanding pattern of inflated performance forecasts and IPO pricing.

Previously, the Financial Supervisory Service analyzed 105 out of 213 companies (excluding SPACs) that went public on KOSDAQ between 2022 and 2024 and set their offering price based on future estimates. The results show that only 6 companies (5.7%) met their projected earnings for the year of listing. As this trend of overestimating earnings has persisted, the Financial Supervisory Service further strengthened the disclosure of the gap between projected and actual earnings in October 2023—but the situation remained unchanged in 2025.

The gap between projected and actual earnings at the time of listing was also extreme. Among the 35 companies that missed their estimates, the average gap (deviation) for operating profit was 196.5%, and for net profit was 209.5%. The average gap for revenue was 27.9%.

Orom Therapeutics, a biotech company, had the largest disparity between forecast and actual performance among last year’s IPOs. In its securities registration at the time of listing, Orom Therapeutics projected revenue of KRW 36.9 billion and an operating loss of KRW 9.5 billion for last year. In reality, its revenue last year was just KRW 23 million, and its operating loss reached KRW 51.7 billion. The gap between projected and actual operating profit was a staggering 440%. The company attributed this miss to changes in development timelines by biotech partners and to the rise in the won–dollar exchange rate.

WiseNUT, an artificial intelligence (AI) agent company, also missed its forecasts by a wide margin. WiseNUT projected revenue of KRW 54.3 billion and operating profit of KRW 10.8 billion for last year at the time of IPO. However, the company’s actual revenue was just KRW 34.7 billion and operating profit only KRW 100 million. WiseNUT explained that this shortfall was due to a reduction in IT project orders from public and private sector clients in the first quarter of 2025, following a political (emergency martial law) issue that arose at the end of 2024.

Concerns Rise as Overly Optimistic Earnings Projections Continue Among KOSDAQ Special Listing Companies in 2026

This trend is being repeated by KOSDAQ special listing companies this year as well. The Asia Business Daily analyzed 10 companies that newly listed on the KOSDAQ in the first half of this year and set their IPO price based on performance projections, concluding that many are unlikely to hit their 2026 forecasts. Kanaph Therapeutics, which listed this March, reported that its estimated revenue for 2026 was KRW 4.9 billion, but its revenue for the first half of the year was only about KRW 100 million. While the company forecast an operating loss of KRW 10.6 billion for the full year in its investment prospectus, its first-half operating loss already totaled KRW 10.1 billion.

Cosmo Robotics, which went public in May, projected KRW 12.9 billion in revenue and an operating loss of KRW 5.9 billion for 2026, but as of the first half of the year had only achieved KRW 2.5 billion in revenue, with operating losses already matching the full-year forecast at KRW 5.9 billion.

In particular, the company is under police investigation for allegedly inflating its prior-year revenue ahead of its IPO. On September 29, the Seoul Metropolitan Police Agency’s Financial Crime Investigation Unit reportedly searched the Cosmo Robotics office in Guro District, Seoul, on suspicion of violating the Capital Markets Act (unfair trading). Investigators suspect the company inflated its revenue by about KRW 3.5 billion by faking robotic equipment sales worth several billion won. After news of the probe broke that day, the company’s stock price hit its lower limit. However, the company countered with a statement asserting, “The revenue in question was legitimate.”

If Companies Inflate Earnings Forecasts at IPO, Individual Investors Ultimately Pay the Price

There are several reasons why special listing companies on KOSDAQ tend to exaggerate their earnings outlooks. When earnings are inflated, corporate value and IPO prices rise, which means the companies can raise more capital. In that process, the fees and equity value for underwriters such as securities firms and venture capital (VC) investors also increase. Because these interests between listed companies and early investors are aligned, such practices are suspected to be repeated annually.

The major problem is that, as stocks—initially overvalued relative to actual performance—decline after listing, the subsequent losses are disproportionately borne by individual investors who buy in too late. According to a 2024 research paper, “Overvaluation of Corporate Value and the Impact of Major Shareholders’ Share Sales on Stock Price Crashes Among KOSDAQ Technology Growth Companies” by Professor Choi Seong-ho of Chosun University’s School of Business, the cycle of inflated IPO projections by KOSDAQ companies, followed by the lifting of the mandatory holding period for major shareholders, has been a driver of stock price collapses.

Professor Choi explained, “The risk of a stock price crash is exponentially greater for companies where projected profits are grossly overstated compared to real results, especially when the major shareholder also sells shares. When optimistic projections turn out to be empty promises and major shareholders sell, the market interprets this as a significant negative signal for technological success, leading to a collapse in corporate trust.” A representative from the Financial Supervisory Service also pointed out, “Excessive short-term earnings projections can directly lead to harm for investors who buy after the listing.”

The structurally distorted ‘applied PER’ (price-earnings ratio), a key IPO pricing indicator, is another factor driving inflated IPO prices. According to a 2023 study by Professor Kwak Youngmin of Ulsan National University’s Accounting Department and Professor Paek Jeonghan of Dong-A University’s School of Business, titled “A Study on IPO Overvaluation of Technology Special Listing Companies,” a significant number of technology exception companies set overly optimistic earnings forecasts in their securities filings, resulting in a substantial gap from realized results.

The study also found that the peer groups used for IPO price valuations oftentimes consisted of strong companies with limited financial similarity to the IPO candidates, resulting in excessive applied PERs. The authors concluded that IPO pricing methods for special listing companies, which rely heavily on PER, should be diversified and refined.

Professor Kwak emphasized, “Currently, the indicative IPO price for technology exception companies is mainly calculated using the relative valuation method, comparing PERs with similar companies. In this process, there is a high risk of excessive future expectations and convenience bias in peer selection. Therefore, we must create a regulatory environment that not only relies on traditional relative valuation but also allows for the development and application of new valuation models that better reflect the characteristics of technology companies.”

This content was produced with the assistance of AI translation services.