A breathtaking rally in Laopu Gold Co is facing a critical test after its stock price hit HK$1,000 ($127), a rare milestone that may deter retail investors due to the steep price tag.

The jewelry maker soared more than 2,300 percent since its listing in late June 2024 to set a new record earlier Thursday, outperforming over 500 peers in the Hang Seng Composite Index. Its share price far surpasses the second-most expensive stock in the Hong Kong Special Administrative Region: bubble tea maker Mixue Group which is trading at around HK$580. 

While Laopu’s ascent underscores market zeal toward the Chinese mainland’s new consumption stocks catering to Gen Z demand, investors will likely demand more to purchase shares at this level. With a minimum trading unit set at 100 shares by the company, it means a buyer must shell out HK$100,000 — the equivalent of $12,750 — to gain exposure to Laopu.

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Share price moves on Thursday illustrate the point. The stock fell as much as 9.4 percent after reaching HK$1,015 earlier in the session. Peer Chow Tai Fook Jewellery Group Ltd swung between gains and losses in Hong Kong while Chow Tai Seng Jewellery Co slumped 8.4 percent on the mainland.

Another crucial test will be a June 27 lockup expiry of 121.4 million shares. That’s more than double the current number of free-float shares. The stock posted its worst weekly drop since its listing in December last year, just before the expiry of a six-month lockup on 10.8 million shares.

“Laopu is excessively expensive in my view, based on cash flow, even though growth looks promising,” said Yu Dingheng, fund manager at Shenzhen Flying Tiger Investment & Management Co. “HK$1,000 is going to be a tough hurdle.”

Companies listed in the SAR can set their own minimum trading units — known as a “board lot” — ranging from dozens to thousands of shares. While investors can place orders for odd lots including a single share through brokerages, these transactions typically take longer to match and can incur higher fees.

Bloomberg reported in March that the financial hub’s exchange was discussing options to lower the threshold for investors to buy some of the most expensive stocks to boost trading activity.

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The retail portion of Laopu’s initial public offering was nearly 600 times oversubcribed, prompting the company to increase the number of shares allocated to individual investors by six times to 11.2 million. 

Laopu currently trades at nearly 32 times forward earnings, above Chow Tai Fook’s ratio at around 16.

Laopu has yet to indicate any plans for a stock split, a common strategy taken by high-flying firms to cheapen the value of each share and make it more affordable. Tencent Holdings Ltd performed a 5-for-1 split in 2014, shortly after share prices peaked at above HK$600. Zai Lab Ltd divided each share into 10 in 2022, lowering the price to around HK$35.