As the management dispute surrounding SM has ended, stock prices of entertainment companies that had been declining have been revived.
According to the Korea Exchange on the 16th, stock prices of HYBE surged 36.6%, while that of JYP rose 19.5% over the past month (from March 14 to April 14). Meanwhile, YG Entertainment also showed a strong uptrend, recording a 15.6% increase in its stock price. On the 14th, both JYP (KRW 87,700) and YG (KRW 65,900) also set new record highs.
During the acquisition competition between HYBE and Kakao for SM Entertainment‘s management rights, entertainment stocks fluctuated for a while. For instance, the KRX Media & Entertainment Index, which consists of HYBE, SM, JYP, and Kakao, recorded a 3.77% drop within March, ranking fifth among the KRX indices.
However, as the global debut of rising girl groups became more apparent this month, the mood in the stock market has changed dramatically. In particular, HYBE plans to debut girl groups in collaboration with Universal Music in the US, and have held auditions in Korea, Australia, the UK, Japan, and other countries, with successful candidates expected to debut in the US.
Meanwhile, JYP Entertainment also held auditions in five major US cities last year and plans to have the selected girl group focus on the North American market, including the US and Canada. At the same time, YG is also poised to dominate the global music market by advancing the official debut of their upcoming girl group, BABYMONSTER.
As major entertainment companies target overseas markets to discover new talent, foreign investors are leading their stock prices, and institutional investors are also joining in. HYBE has attracted KRW 159 billion (USD 121.8 million) and KRW 99 billion (USD 75.8 million) from foreign investors and institutional investors, respectively, over the past month. YG Entertainment also saw a net purchase of KRW 18 billion (USD 13.7 million) and KRW 42 billion (USD 32.2 million) from foreign and institutional investors, respectively. JYP Entertainment attracted KRW 75 billion (USD 57.5 million) in foreign funds alone.
The entertainment industry expects to generate huge profits if rising girl groups succeed, particularly in the US, where purchasing power for concert tickets and albums is high and the average per capita spending is impressive. If they achieve the same success as BLACKPINK in the US, for example, entertainment companies can significantly increase their margins.
Regarding this, analyst Lee Ki Hoon at Hana Financial Investment said, “The most important driving force for entertainment stocks this year is the US girl groups of HYBE and JYP,” adding, “the maximum expected revenue per group, if they succeed, would be KRW 500 billion (USD 383 million) to KRW 700 billion (USD 536 million), with operating profits of around KRW 50 billion.”
It is also a positive factor that entertainment companies plan to launch additional new groups competitively. This year, a record-high of 10 new groups are scheduled to debut from the four major entertainment companies. It is expected to fill the gap left by existing popular groups such as BTS, and lead to diversified revenue streams for entertainment companies.
Expectations also increased for a continued growth structure through the multi-label system, which is characterized by establishing dedicated labels rather than managing all artists under one label, aiming for efficiency.
Regarding this, Cha Yoo Mi, a researcher at Mirae Asset Securities, said, “Through the introduction of the multi-label system, we can establish a multi-IP (intellectual property) structure and create a stable and sustainable business structure. It can also increase performance visibility and quickly raise the profile of new artists.”
Source: Seoul Economic Daily