K-pop boy group Stray Kids / Courtesy of JYP Entertainment
K-pop industry passing peak and undergoing bubble deflation, analysts say
By KTimes
Retail investors holding entertainment stocks are growing increasingly disheartened as the share prices of major K-pop agencies, YG Entertainment and JYP Entertainment, have plunged by approximately 25 percent and 45 percent, respectively, since the start of the year.
Analysts attribute this decline to the K-pop industry moving past its peak and entering a period of bubble deflation, which makes an immediate rebound unlikely.
Overall downtrend in K-pop
HYBE shares, which soared to 300,000 won ($235) last June, are currently trading at around 190,000 won. SM Entertainment’s stock price has nearly halved from its peak of 147,000 won to around 76,000 won over the past year, and the situation is even more dire for JYP and YG.
JYP Entertainment’s stock fell more than 60 percent from its 52-week high of 146,600 won. Similarly, YG Entertainment’s stock has lost more than 50 percent of its value from a 52-week high of 83,800 won.
This decline is linked to underwhelming first-quarter performances and low expectations for the second half of the year.
Hana Financial Investment’s Research Center projected HYBE’s second-quarter operating profit to fall 22 percent year-on-year to 63.8 billion won, SM to fall 7 percent to 33.2 billion won, and JYP to drop 56 percent to 20.1 billion won. YG was forecast to suffer a 6.6 billion won loss during that period.
The outlook for JYP and YG’s second-quarter performance is especially bleak.
The six-member girl group NMIXX / Courtesy of JYP
JYP: Who’s next after Stray Kids and TWICE?
JYP Entertainment continues to benefit from the popularity of groups like Stray Kids and TWICE, but the growth of new artists has been slow.
The early-year album release from girl group ITZY sold only 320,000 copies in the first week, compared to 820,000 copies of their previous album.
Similarly, NMIXX’s album sold 620,000 copies, down from 1.03 million of their previous release. The new boy group Xdinary Heroes, aimed at the Japanese market but debuting first in Korea, managed to sell 110,000 copies in the first week.
Lee Hwa-jung, an analyst at NH Investment & Securities, said, “JYP’s younger groups have shown less impressive performance compared to competitors, reducing its investment appeal.”
However, Mirae Asset Securities’ Kim Gyu-yeon said, “The debut of two new teams in the second half of the year, starting with the Japanese boy group Xdinary Heroes, and the resumption of world tours by TWICE and Stray Kids, could help restore value.”
YG: beyond BLACKPINK
YG’s new girl group, Babymonster, sold 400,000 copies of their debut album and expanded their fandom, selling an additional 200,000 copies.
However, opinions differ on whether they can achieve the same success as BLACKPINK.
There has been no news of a new boy group since Treasure, four years ago. The company’s performance heavily depends on the activities of BLACKPINK members, which is considered a significant weakness.
Hyundai Motor Securities analyst Kim Hyun-yong said, “YG’s performance recovery will depend on the resumption of BLACKPINK’s full group activities, the growth of Babymonster and Treasure, and the debut of new artists. Currently, a wait-and-see approach is valid.”
Girl group Babymonster / Courtesy of YG Entertainment
K-pop industry at critical juncture
Some analysts believe the K-pop market has passed its peak.
Music critic Kim Do-heon said, “The stock prices of K-pop agencies were excessively inflated during last year’s SM stock acquisition process by Kakao.”
Music critic Kim Jak-ga added, “The SM stock acquisition battle, personal issues involving artists, and conflicts within HYBE, such as those involving Ador’s CEO Min Hee-jin, have all damaged the credibility of the K-pop industry. As K-pop remains focused on fandom business, its sustainable growth potential has reached its limits.”
Min Hee-jin, CEO of ADOR, answers questions from reporters as she leaves the Yongsan Police Station in Seoul, Tuesday, after completing her first summons investigation regarding allegations of breach of duty. / Yonhap
This article from the Hankook Ilbo, sister publication of The Korea Times, is translated by generative AI and edited by staff of The Korea Times.