Newborn Town Inc. (SEHK: 9911) saw its stock price plummet by 5.10% in Friday's pre-market trading, despite reporting strong financial results for the fiscal year 2024. The sharp decline comes on the heels of the company's announcement regarding a significant funding allocation for its share schemes.

The Hong Kong-listed social networking and internet technology company revealed plans to provide up to HK$200 million over the next two years to an independent professional trustee for the administration of its share schemes. This move, aimed at purchasing company shares, has raised concerns among investors about potential share dilution and the impact on stock value. The timing of this announcement, coming shortly after the release of positive financial results, appears to have overshadowed the company's strong performance in the eyes of the market.

Ironically, Newborn Town reported impressive financial figures for 2024, with revenue soaring to RMB 5.09 billion, marking a substantial increase of 53.9% year-over-year. The company also posted a net income of RMB 787.8 million and a gross profit of RMB 2,607.7 million, with a healthy gross margin of 51.2%. Despite these robust numbers, the market's negative reaction to the share scheme funding announcement suggests that investors are prioritizing concerns over potential dilution rather than celebrating the company's financial achievements.