Hybe shares soar 28% in just one month on foreign, institution buying

Hybe headquarters in Seoul [Photo by Yonhap]

Shares of Hybe Co., the label behind the global sensation BTS, are on a rise following a struggle to sell its entire remaining stake in SM Entertainment Co. after it gave up on the takeover of the entertainment company in March.

Shares of Hybe closed 4.9 percent higher at 235,500 won ($177.6) on Wednesday. The stock soared 28.2 percent from March 10, the trading day just before Hybe announced to give up the acquisition of SM Entertainment. Foreigners and institutions net purchased 127 billion won and 102.5 billion won in Hybe shares, respectively, during the period.

Shares of Kakao Corp., in the meantime, that has successfully acquired SM Entertainment, rose a mere 1.03 percent during the period. The stock fell 2.78 percent since April 6 when reports broke out about a prosecutorial investigation. SM Entertainment shares also nosedived 35.59 percent as they lost momentum for a rise after the end of the management feud.

The financial investment industry noted that the rise in Hybe‘s shares is attributed to the popularity of BTS member Jimin’s solo activities. The title of Jimin‘s solo album, “Like Crazy,” topped the U.S. Billboard Hot 100 for the first time as a K-pop solo artist.

“BTS members are expected to continue their solo activities and other boy groups such as Seventeen, ENHYPEN, and TXT are expected to see their concert attendance double this year,” said Jeong Ji-soo, an analyst at Meritz Securities Co. “Concerts and fan meetings of rookie girl groups such as LE SSERAFIM and NewJeans will also contribute to the company’s increased earnings performance.”

Hybe’s remaining shares in SM Entertainment were sold partly through Kakao’s tender offer. It sold 44 percent of the initially planned amount at 150,000 won per share.

Concerns were raised that Hybe may suffer investment losses worth 10 billion won as it failed to dispose all of its holdings in SM Entertainment. The company, however, told its shareholders last month that no loss will be incurred as long as the stock price remains in the 92,000~93,000 won range.