Why is MiniMax stock sliding today?

MiniMax Group Inc. stock is falling nearly 9.8% to trade at HK$169.2 during today’s session, extending a prolonged rout after the company’s new AI model drew scrutiny for a high hallucination rate.

Losses in Minimax also came amid a prolonged rout in Chinese AI model developer shares as investors continue to question the company’s competitive position amid an increasingly brutal pricing war.

Minimax’s new AI model-- the M3.1 Flash-- was released earlier in October. While the model was seen as much cheaper to run than rivals — it drew attention for displaying a high hallucination rate that raised questions about model quality.

Monday’s move is part of a broader dual decline in Hong Kong’s leading listed AI model stocks, with MiniMax dropping over 10% and peer Zhipu AI also falling more than 5%. Investors are scrutinizing the sustainability of AI spending and the pace of flagship model updates by Chinese developers, which face pressure from new releases and price cuts by U.S. rivals.

MiniMax had not released a new flagship text model in over four months following M3, and while M3.1 Flash cut usage costs by 70%, the quality concerns tempered enthusiasm.

Shares of MiniMax fell below their Hong Kong IPO price earlier this week, extending a retreat from their March peak amid intensifying competition over model pricing and a broader technology selloff.

Monday’s losses came amid a 0.4% rise in the Hang Seng index.