From 95,000 to 35,000 in one year, researchers warn of YG’s Q2 “loss”
"I bought more yesterday, but it dropped further today. When will I be able to get out of this? I'm tired of seeing new low alerts" (Online stock trading app community)
With YG Entertainment’s stock price hitting “52-week lows” repeatedly, and forecasts of an operating loss for Q2 this year circulating in the securities industry, concerns are growing among individual investors (retail investors) about the future direction of the stock price.
According to the Korea Exchange on July 19th, YG Entertainment’s stock closed at 35,300 won on the KOSDAQ market, down 0.7% from the previous day. The stock continued to set new lows, dipping to 34,650 won during the day.
YG Entertainment’s stock price had soared to 95,200 won on May 30th last year but has since plummeted to 37.08% of that value in just 1 year and 2 months.
Negative outlooks on YG Entertainment continue to emerge in the securities industry. Analysts attribute the decline to delayed generational shifts following the era of “BLACKPINK“, which has lowered performance expectations.
The forecast for Q2 this year is particularly bleak.
Kim Hye-young, a researcher at Daol Financial Group, projected through a report on July 17th that YG Entertainment’s Q2 revenue and operating profit would decrease by 35.8% and 98.9% year-on-year to 101.7 billion won and 300 million won, respectively.
On this day, Lee Sun-hwa, a researcher at KB Securities, estimated YG Entertainment’s Q2 revenue to drop by 41.1% year-on-year to 93.3 billion won, with an operating loss of 4.3 billion won.
Financial information firm FnGuide compiled the consensus (average) Q2 revenue and operating profit forecasts from domestic securities firms, estimating them at 106.3 billion won and 6.9 billion won, respectively. The projections by Kim Hye-young and Lee Sun-hwa are significantly below this consensus.
Kim Hye-young noted “YG Entertainment’s key performances in Q2 will come from BABYMONSTER’s album sales and TREASURE’s concert revenue” and emphasized that profitability will be disadvantaged this year, with better performance expected in 2025.
She added, “The delayed generational shift has led to a performance ice age. Sustainable growth requires the success of BABYMONSTER and new IPs, as well as actions to quell doubts about the production system.“
Lee Sun-hwa commented, “The absence of full-group activities from BLACKPINK, which served as a cash cow, along with increased amortization expenses due to individual exclusive contracts with members has added pressure. Investment expenses for the new IP BABYMONSTER are also rising.”
Lee further noted, “This year, focusing on new IP investments will inevitably damage fundamentals. Although TREASURE’s revenue contribution from concerts is expanding, they need to demonstrate steady growth in the global fandom by scaling up concert regions and audience sizes.”
Consequently, Lee lowered her annual operating profit estimate for this year from 45 billion won to 13 billion won, a 70% decrease. She also revised next year’s annual operating profit estimate down by 26%, from 84 billion won to 63 billion won.
However, some analysts predict a recovery in YG Entertainment’s performance towards the end of the year.
Lee Sun-hwa maintained a “buy” recommendation, stating, “As expectations for full-group activities from BLACKPINK increase towards the end of the year, and the potential for collaborations with existing IPs like 2NE1 becomes more visible, the stock will secure upward momentum.”
Kim Hye-young also projected, “With BLACKPINK’s comeback and world tour expected in 2025 and BABYMONSTER releasing a full album in the second half of this year and holding a concert in 2025, performance recovery is expected to begin in earnest from 2025.”
