SEOUL (ANN/KOREA HERALD) – K-pop powerhouses are currently navigating a challenging period, with Hybe, the agency behind global sensation BTS, bearing the brunt of recent setbacks amid ongoing scandals.
On Wednesday, Hybe’s shares dropped by 4.56 per cent, closing at KRW163,100 (USD120), marking the lowest point since December 2022. This decline extended a four-day losing streak, with the stock falling 11.2 per cent since August 8, despite a brief uptick following better-than-expected second-quarter results. Although Hybe reported record-breaking second-quarter sales of KRW640.5 billion, its operating profit shrank by 37 per cent year-on-year to 50.9 billion won.
The sharp decline in Hybe’s stock value is attributed to several recent controversies, including BTS member Suga’s drunk driving incident and rumors surrounding Hybe Chairman Bang Si-hyuk’s alleged relationship with a 23-year-old streamer. These issues have been compounded by ongoing disputes between Hybe and Min Hee-jin, CEO of its subsidiary label Ador, over management rights, significantly impacting Hybe’s stock performance. Since peaking at 256,000 won in January, Hybe’s shares have plummeted by 36 per cent.
Hybe’s struggles are reflective of broader challenges facing the K-pop industry.
JYP Entertainment, home to popular groups Twice and Stray Kids, has seen its stock price more than halve since the beginning of the year, closing at KRW50,300 on Wednesday. The company reported a 37 per cent year-on-year decline in second-quarter sales, totaling 95.7 billion, with operating profit plummeting by 80 per cent to KRW9.3 billion.
Similarly, YG Entertainment, which is striving to replicate the success of Blackpink, reported disappointing second-quarter results, including a KRW11 billion operating loss. YG’s stock has fallen by 27 per cent this year.
SM Entertainment has also faced significant volatility, with its stock dropping from a high of around KRW160,000 last year to a low of KRW63,700 on August 5 this year. Despite a 6 per cent increase in second-quarter sales, a 31 per cent drop in operating profit has contributed to continued stock depreciation in recent days.
Despite these challenges, market analysts remain cautiously optimistic about the K-pop sector’s recovery, driven by the anticipated return of major groups later this year.
“The global success of affiliated artists and strong core business growth make the top four entertainment companies’ valuations still attractive,” said Kim Min-young, an analyst at Meritz Securities. She highlighted the importance of focusing on new artists and ventures over short-term earnings, as these factors will have a more significant impact on stock prices.
NH Investment & Securities analyst Lee Hwa-jeong commented on YG Entertainment’s situation, noting that the company is in “a transition period due to a generational shift.” Despite a disappointing second quarter, driven by one-time costs for new artists, Lee expects a rebound by 2025, with improved profitability and senior-level artists like Blackpink resuming activities.
For Hybe, market consensus suggests a potential recovery starting late this year, particularly with BTS scheduled to make a full-group return in 2025.
“With the resolution of the lingering negative factors by around the fourth quarter, topped by anticipation of BTS’ planned comeback next year, the stock price will likely start to recover around the end of this year,” said Lee Ki-hoon of Hana Securities.
