VisionSys AI Inc. Plunges 22.7828% on Restructuring with Reverse Split and Dual-Class Shares

VisionSys AI Inc. plunged 22.7828% in pre-market trading on November 26, 2025, following a major corporate restructuring approved by shareholders. The company implemented a 1-for-50 reverse stock split to address listing compliance while authorizing a dual-class share structure with Class B shares carrying 100 votes each, consolidating management control. These changes also created a potential for significant future dilution through the issuance of nearly 9.8 billion unissued shares.

The restructuring concentrated voting power among insiders, insulating the controlling group from shareholder activism. Class A shares (underlying ADSs) remain convertible to Class B shares only with board approval, further entrenching governance control. The move to scripless shares and proportional reductions in ADSs underscore the company's strategic shift toward governance entrenchment over shareholder equity dilution risks.

Markets reacted sharply to the governance overhaul, which prioritizes management flexibility over shareholder interests. The authorized share capital expansion to $10 million creates a 43x overhang relative to post-split shares, heightening concerns about capital-raising strategies that could devalue existing holdings. This structural imbalance between voting rights and economic ownership may deter institutional investors.

The pre-market selloff reflects investor skepticism about the long-term implications of concentrated control and dilution risks. While the reverse split addresses immediate listing requirements, the governance framework now favors management interests at the expense of liquidity and transparency, creating a challenging environment for market confidence.

Backtest Assumption: A hypothetical strategy shorting VisionSys post-announcement would have capitalized on the 22.78% pre-market drop. Historical patterns suggest such governance-driven selloffs often persist for 3-5 trading days, with volume spikes confirming bearish sentiment. A stop-loss at 10% above the intraday low would have secured gains while mitigating volatility from potential short-covering rallies.