Hesai's 10.4% Plunge: A Volatile Prelude to Hong Kong IPO Uncertainty

Summary
• Hesai Group (HSAI) plunges 10.4% to $23.205, hitting an intraday low of $23.20 amid heavy turnover of 4.38M shares.
• The stock trades below its 52-week low of $3.56, with a dynamic PE ratio of 414.9 signaling extreme valuation pressure.
• Recent news hints at a $300M Hong Kong IPO plan, raising questions about capital allocation and market sentiment.

Hesai Group’s dramatic intraday collapse has sent shockwaves through the auto tech sector. The stock’s 10.4% drop—its largest single-day decline in months—coincides with a strategic pivot toward a Hong Kong IPO. With turnover surging to 4.38M shares and the price breaching critical support levels, the move raises urgent questions about capital structure, market confidence, and sector dynamics.

Hong Kong IPO Speculation Triggers Flight to Safety
Hesai’s 10.4% selloff is directly tied to recent news of its planned $300M Hong Kong IPO, as reported by AASTOCKS and IFR. While the company has submitted a confidential application to HKEX, the market is interpreting the move as a potential dilution risk or a signal of weak U.S. investor appetite. The stock’s sharp decline from its $26.94 intraday high to $23.20 low reflects immediate profit-taking and short-term bearish positioning. With the 200-day moving average at $16.27 and Bollinger Bands indicating oversold conditions, the sell-off appears to be a liquidity-driven reaction to the IPO announcement rather than a fundamental deterioration in business prospects.

Auto Parts Sector Volatility: HSAI's Plunge Outpaces LAZR's Modest Gains
While HSAI’s 10.4% drop dominates headlines, the broader auto parts sector shows mixed resilience. Luminar Technologies (LAZR), a key sector leader, rose 0.76% on the day, reflecting divergent investor sentiment. Marelli Holdings’ recent Chapter 11 filing and Car Toys’ bankruptcy liquidation have created a backdrop of sector-wide uncertainty, but HSAI’s selloff appears more directly tied to its IPO-related capital reallocation. The contrast highlights how market-specific catalysts—such as HSAI’s cross-border listing—can overshadow broader industry trends.

Options Playbook: Capitalizing on HSAI's Volatility with Gamma-Driven Contracts
• Technical Indicators: 200-day MA: $16.27 (below), RSI: 82.63 (overbought), MACD: 1.22 (bullish divergence), Bollinger Bands: $17.58–$26.83 (price near lower band).
• Key Levels: Immediate support at $20.78 (30D pivot) and $17.60 (200D pivot). Resistance remains at $22.20 (middle Bollinger Band).

Top Put Option: HSAI20250919P22.5
• Code: HSAI20250919P22.5
• Type: Put
• Strike: $22.50
• Expiry: 2025-09-19
• IV: 70.97% (elevated volatility)
• Delta: -0.384 (moderate sensitivity)
• Theta: -0.0153 (slow time decay)
• Gamma: 0.0805 (high sensitivity to price swings)
• Turnover: 11,819 (liquid)
• Leverage: 16.19% (attractive gearing)
• Payoff at 5% downside: $1.225 (max profit if price drops to $22.27).
Why This Pick: The put offers a balance of leverage and gamma, ideal for a short-term bearish bet as HSAI tests key support levels. Its 70.97% IV suggests the market is pricing in significant near-term volatility.

Top Call Option: HSAI20250919C22.5
• Code: HSAI20250919C22.5
• Type: Call
• Strike: $22.50
• Expiry: 2025-09-19
• IV: 81.37% (high volatility)
• Delta: 0.612 (moderate directional exposure)
• Theta: -0.0514 (accelerating time decay)
• Gamma: 0.0704 (strong price sensitivity)
• Turnover: 33,774 (high liquidity)
• Leverage: 8.97% (moderate gearing)
• Payoff at 5% downside: $0.00 (no profit in a bearish scenario).
Why This Pick: While the call is directional, its high gamma and liquidity make it a viable hedge against a potential rebound above $22.50. Traders should monitor the 200-day MA ($16.27) as a critical floor.

Action Insight: Aggressive bears should prioritize the HSAI20250919P22.5 put for a 5% downside scenario. If HSAI breaks below $20.78, consider rolling into the HSAI20251017P20 put for extended bearish exposure.

Backtest Hesai Stock Performance
The HSAI ETF has historically shown positive short-to-medium-term performance after experiencing a -10% intraday plunge. The 3-day win rate is 50.64%, the 10-day win rate is 49.68%, and the 30-day win rate is 57.96%, indicating that the ETF tends to rebound in the following days. The maximum return during the backtest period was 14.05% over 30 days, suggesting that there is potential for gains in the period following a significant drop.

HSAI at a Crossroads: IPO Uncertainty and Sector Divergence
Hesai’s 10.4% selloff underscores the market’s skepticism toward its Hong Kong IPO plans and broader sector headwinds. While the stock’s technicals suggest a potential rebound from the $17.60 200-day pivot, the path forward hinges on the IPO’s execution and sector dynamics. Sector leader Luminar (LAZR) rose 0.76%, highlighting divergent investor sentiment. Traders should closely monitor HSAI’s ability to hold above $20.78 and the 200-day MA. A breakdown below $17.60 could trigger a wave of panic selling, while a rebound above $22.50 might attract short-covering buyers. Immediate action: Short-term bears should target the HSAI20250919P22.5 put, while long-term investors should await clarity on the IPO’s terms and capital allocation strategy.