HYBE stock pops after SM takeover retreat as K-pop acts rock

HYBE's stock is flying high again, following the successful solo projects by members of BTS — Jimin being the latest — amid global popularity of its K-pop acts such as NewJeans and Seventeen.

Jimin of BTS performs at MMA 2020. [NEWS1]

HYBE’s stock is flying high again, following successful solo projects by members of BTS — Jimin being the latest — amid the global popularity of K-pop acts such as NewJeans and Seventeen.

The solid reception to efforts by the K-pop stars have overshadowed concerns related to HYBE's recent failure to become the largest shareholder of SM Entertainment and BTS taking a break from group performances.

HYBE’s shares have been on the rise for six consecutive trading days, a 17.97 percent jump compared to April 3 to close at 224,500 won on Tuesday. The figure is 1.13 percent up from the day before.

The rise is attributed to strong investor sentiment after the news that Jimin's "Like Crazy" topped the Billboard’s Hot 100 singles chart, a first for any solo K-pop star, on April 4.

Only last month, prospects for HYBE's shares were dim due to a retreat from the SM takeover battle.

HYBE’s shares have dipped to close at 170,300 won on March 15 following the surrender.

Boy band Seventeen with HYBE founder Bang Si-hyuk pose for the photo after winning Culture Ambassador Award at the LA Capital of Culture & Creativity festival in Los Angeles on Dec. 9. [YONHAP]

When BTS announced it will take a break from its group activities on June 15 last year, HYBE shares plummeted 24.87 percent compared to the day before to close at 145,000 won — showing how much HYBE was dependent on BTS and signaling a possible downturn for the K-pop agency.

Jimin's performance helped the stock overcome concerns.

Topping the Hot 100 chart is especially meaningful because it takes into account album sales, streams, downloads and radio airplay.

After Jin, RM, J-Hope and Jimin, next in line for a debut solo album is Suga, who will release “D-Day” on April 21 under stage name Agust D and will be the only member to book a world tour along the way. Suga’s world tour will run for three months from April 26, starting off in the United States.

Investors might be seeing that HYBE is not overly dependent on BTS and that the K-pop agency's future and reputation can be supported by other acts, such as Seventeen, Tomorrow X Together and newly-emerging girl groups, such as NewJeans and Le Sserafim.

"Even taking out Jimin from the equation, other artists under HYBE are showing strong results," said analyst Park Seong-guk at Kyobo Securities. "Especially for boy band Seventeen, its upcoming EP 'FML' already recorded a new high for pre-sale units merely days before its official release on April 24. For the second quarter this year, Seventeen is anticipated to contribute the most to the album sales made by HYBE, also fueled by Le Sserafim's upcoming first full-length album 'Unforgiven,' which also surpassed 1 million units in album presales before its release next month."

Quarterly album sales by four K-pop powerhouses — SM, YG, JYP and HYBE — reached a new record high, with 16.35 million copies sold on the first quarter of 2023, according to Shinhan Securities report on Tuesday. And HYBE made more than half the sales, with 9 million units.

Girl group Le Sserafim poses for the photo at the 2022 KBS Song Festival held at Jamsil Arena in southern Seoul on Dec. 16. [NEWS1]

“Expansion of global fandom has led to higher-than-expected sales of artist IPs in the form of album sales, streaming and related merchandises,” analyst Ji In-hae from Shinhan Securities, using IP and shorthand for intellectual property. “All of the copyrights of the IPs turn to profit for entertainment companies.”

The next mission falls to creating a systemized, global network to stably transit the IPs to quarterly profits, and coming up with a unique artist training system to successfully debut of new groups overseas.

HYBE CEO Park Ji-won announced after release of 2022 earnings that the company is planning to introduce additional services to strengthen profitability of the Weverse community. By the second quarter, fans will be able to design and purchase their own artist-related merchandise, while in the third quarter, a subscription-based membership service will be rolled out.

Monthly active user of Weverse was 8.5 million as of fourth quarter last year.

“HYBE is one of the forerunners of the next mission for K-pop powershouses as it runs its own fan platform, Weverse, possesses global network with labels overseas it acquired and will launch a new girl girl group based in the U.S. by the latter half of this year,” Ji noted.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]