YG’s stock soars thanks to BLACKPINK while SM’s stock plunges after CHENBAEKXIU announces departure.
YG Entertainment renewed its high price following BLACKPINK’s world tour performance, while SM’s stock price suddenly plunged about 7% on June 1st when three members of EXO Chen, Baekhyun, and Xiumin (CHENBAEKXIU) announced their departure from the company.
According to the Korea Exchange on June 2nd, YG Entertainment closed at 94,700 won, up 0.95% from the previous trading day, and SM closed at 101,800 won, down -7.2%.
Over the past month, from May 2nd to June 1st, the stock price growth rate of YG Entertainment reached 47.7%, and foreign investors’ net purchases during this period mounted to 137.8 billion won.
SM shares fell -2.84% during the same period. Foreign investors sold a net 38.1 billion won, while institutional investors also sold a net of 24.8 billion won. During the period, individual investors received all of the volume and bought a net KRW 74.1 billion.
Currently, SM is the only one among the four representative enterprise stocks in Korea that both institutions and foreign investors net sold the stocks during the same period.
In terms of first-quarter earnings this year, YG Entertainment’s earnings exceeded expectations, partly thanks to the stock price. The company’s operating profit in the first quarter grew 457% year-on-year and sales increased 118%.
On the other hand, SM’s operating margin was undermined and its operating profit lowered market expectations, reflecting one-off costs such as responding to management disputes and operating shareholders’ meetings earlier this year.
Regarding SM’s first-quarter performance, there was even a “hold” opinion in the stock market, which means the target is lowered and virtually sold. It was explained that the main factor was the delay in the activities of the artists rather than the already expected poor performance.
Researcher Park Soo Young of Hanwha Investment & Securities said, “The sluggish performance in the first quarter was expected to some extent, but the continued delay in artist activities is somewhat worrisome”.
Against this backdrop, when artists CHENBAEKXIU announced their exit from SM, that is another major negative factor. Shareholders once again feel the difficulties of entertainment stocks after the three members of EXO voiced up against the treatment they received from SM.
An anonymous investor on the stock bulletin board said, “The biggest risk of investing in entertainment stocks is artist-related incidents and accidents”. Additionally, they said, “Human management is the most difficult, and entertainment stocks are such a high-risk industry”.
The investor said, “I remember that the drop was more than 20% when TVXQ left SM in the past”, adding, “It was because TVXQ was overwhelming in terms of SM sales and profit contribution at the time and it happened in its heyday”.