Korean Entertainment Stocks Plummet Amidst High Market Expectations
Entertainment-related stocks, including YG Entertainment, are experiencing a sharp decline. Despite decent performance, the markets expectations have risen, and the momentum for stock price increases fueled by the anticipated lifting of Chinas ban on Korean cultural content has diminished.
On the 6th, YG Entertainments stock closed at 67,100 KRW, down 6.81%. Over the past month, the stock has plummeted by 32.63%. During the same period, other major companies like SM Entertainment (-18.69%) and JYP Entertainment (-3.33%) have also seen significant drops, while HYBE, buoyed by expectations surrounding the return of BTS, managed to rise by 12.11%.
Analysts attribute the stock decline to disappointing performance against market expectations. YG Entertainment reported a third-quarter revenue of 173.1 billion KRW, marking a 107% increase compared to the same period last year. The operating profit was 31.1 billion KRW, and net profit reached 17 billion KRW, indicating a return to profitability. However, both operating profit and net profit fell short of market estimates by 8% and 44%, respectively. This failure to meet heightened market expectations has led to the sharp decline in stock prices.
An analyst from iM Securities expressed significant disappointment regarding merchandise sales (MD). He noted that the lack of new music releases resulted in fewer pop-up events outside of tours, and the renewed light sticks were not significantly different from previous versions. Consequently, it is estimated that per capita merchandise spending in the regions where tours were held, such as the U.S. and Europe, did not increase as much as expected compared to the previous tour.
Furthermore, he pointed out that the third-quarter performance fell short of the markets heightened expectations for merchandise sales related to BLACKPINK, which is currently on a large-scale stadium tour. Adjustments have been made to the expected release date of BLACKPINKs new album, moving it from the fourth quarter to the first quarter of next year, which has also led to a reduction in merchandise sales expectations and a downward revision of fourth-quarter performance estimates.
SM Entertainment also reported disappointing third-quarter results for this year.
On the 6th, YG Entertainments stock closed at 67,100 KRW, down 6.81%. Over the past month, the stock has plummeted by 32.63%. During the same period, other major companies like SM Entertainment (-18.69%) and JYP Entertainment (-3.33%) have also seen significant drops, while HYBE, buoyed by expectations surrounding the return of BTS, managed to rise by 12.11%.
Analysts attribute the stock decline to disappointing performance against market expectations. YG Entertainment reported a third-quarter revenue of 173.1 billion KRW, marking a 107% increase compared to the same period last year. The operating profit was 31.1 billion KRW, and net profit reached 17 billion KRW, indicating a return to profitability. However, both operating profit and net profit fell short of market estimates by 8% and 44%, respectively. This failure to meet heightened market expectations has led to the sharp decline in stock prices.
An analyst from iM Securities expressed significant disappointment regarding merchandise sales (MD). He noted that the lack of new music releases resulted in fewer pop-up events outside of tours, and the renewed light sticks were not significantly different from previous versions. Consequently, it is estimated that per capita merchandise spending in the regions where tours were held, such as the U.S. and Europe, did not increase as much as expected compared to the previous tour.
Furthermore, he pointed out that the third-quarter performance fell short of the markets heightened expectations for merchandise sales related to BLACKPINK, which is currently on a large-scale stadium tour. Adjustments have been made to the expected release date of BLACKPINKs new album, moving it from the fourth quarter to the first quarter of next year, which has also led to a reduction in merchandise sales expectations and a downward revision of fourth-quarter performance estimates.
SM Entertainment also reported disappointing third-quarter results for this year.
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