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HYBE, SM, JYP rise in market cap, only YG drops, will there be a rebound? 

YG fell from 1st to 4th place in the market cap of Korean entertainment stocks. With BLACKPINK’s possible contract renewal and BABYMONSTER’s debut coming up, will YG bounce back? 

Amid the rapid growth of entertainment stocks, YG Entertainment (50,800 won ▼2,000 -3.79%)) is struggling alone. At one time, YG surpassed SM and JYP, ranking first in the market capitalization of domestic entertainment stocks, but analysis has pointed out that YG’s growth has stopped due to the lack of clear momentum in recent years.

In the KOSDAQ market on February 17th, YG closed the transaction at 50,800 won, down 2,000 won (3.79%) from the previous day. YG Entertainment, which has been listed on the KOSDAQ market since November 2011, was considered one of the top three entertainment companies in Korea, along with SM Entertainment (SM (130,100 ▼ 1,800-1.36%) and JYP (JYP Ent. (71,800 ▼ 500-0.69%) until HYBE Labels (182,000 ▼ 8,500-4.46%) was listed.

YG Entertainment stock

YG’s past was splendid. When singer Psy’s “Gangnam Style” became the first Korean song to reach No. 2 on Billboard Hot 100, YG’s stock price soared to 80,000 won in October 2012. In 2014, YG surpassed SM in market capitalization, ranking No. 1 in the entertainment industry. However, due to several negative factors, YG’s stock price has declined and recently stayed in the 40,000-50,000 won range.

Other entertainment stocks have grown in size in recent years. HYBE, which went public in October 2020, quickly became the number one market capitalization in the entertainment industry. The market capitalization of SM, which was considered one of the top three entertainment stocks along with YG, jumped 4.14 times from 746.8 billion won on October 15, 2020 to 3.925 trillion won that day. JYP also increased its market cap by 2.09 times from 1,208.6 billion won to 2,530.9 billion won during the same period.

In the meantime, YG’s market capitalization only increased 1.15 times from 825.5 billion won to 949.7 billion won. YG’s stock prices fluctuated over the past year, but stayed in the 50,000 won range from 57,400 won on February 18 last year to 52,800 won the previous day. While other entertainment companies are growing in size, YG is being left alone.

The downfall of YG began when former BIGBANG’s Seungri was identified as a key figure in the Burning Sun case that broke out in 2018. Due to this incident, YG’s performance deteriorated significantly and its stock price plummeted. On top of this, bad news overlapped with the controversies over illegal use of drugs by YG idols and former CEO Yang Hyun Suk being investigated for trying to cover up the drug investigation.

YG’s performance has been carried by BLACKPINK, who debuted in 2016. BLACKPINK’s 2018 comeback album gained popularity by topping the iTunes album charts in 41 countries. Collaborating with American pop star Selena Gomez, BLACKPINK’s single “Ice Cream” stayed on the Billboard Hot 100 chart for 8 weeks.

The stock market has a positive outlook on YG’s share price.  According to the Wise Report, the average target price of securities companies that have released analysis reports on YG for the past month is 70,200 won. Four securities firms maintained their target price, and one raised it. Some analysts say that YG’s stock price in the future depends on BLACKPINK’s renewal of contract, TREASURE’s success, and BABYMONSTER’s upcoming debut.

Park Soo Young, a researcher at Hanwha Investment & Securities, said, “TREASURE has proved its strong fandom by conducting a Japanese tour for about two months from the end of November last year to the end of this January. TREASURE has begun to show unexpected results and concerns over the departure of its existing flagship IP (intellectual property rights) or delay in its new IP debut have also been lulled.”

Daol Investment & Securities researcher Kim Ha Jeong said, “Other entertainment companies have (positive) issues, and JYP Entertainment is tied to SM Entertainment, but YG Entertainment seems to be left out. BABYMONSTER’s debut will have a big impact on the stock price. If these problems are resolved in a positive way, I think there is room for YG’s stock price to rise.”

Source: MoneyToday

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