Jobaaj Stories
Korean boy band BTS has proved to us that their words are not cheap as what the company calls a 'mistranslation' cost its parent company, HYBE corp, over $1.7 billion in market cap.
HYBE corporation is a South Korean multinational entertainment company that operates as a record label, talent agency, music production company, event management, and concert production company. It was established in 2005 by Bang Si-Hyuk. They took in and trained the famous boy group BTS and debuted them in 2013.
US federal bank hikes interest rate by 75 bps, read more.
In 2015, the group became famous in South Korea, and in the next 3 years, the group became famous internationally. As the company grew larger, it acquired several other companies, including SB Projects (which manages Ariana Grande and Justin Bieber).
The company debuted on the Korean stock exchange and got placed in the KOSPI index on 15th October 2020 as its shares were listed at a 100% premium at 270,000 won per share. The share surged 30% on the first day resulting in a market cap of 11 trillion won.
The stock hit its lifetime high on 17th November 2021, when it hit 421,500 won per share. Following that, the share declined consistently to touch a low of 244,500 won per share but rebounded back from there.
Since 10th June 2022, the stock has been declining as the stock closed at 148,000 Won(Korean currency) per share today, registering a loss of 34% in a week! The news was that all 7 members would be focusing on solo albums for some time, which was misinterpreted as a hiatus/disbandment. The company's market cap is left at $6.3 billion after today's session, as opposed to $12.13 billion when the stock was at its lifetime high.
We at Jobaaj feel that the stock is too unbalanced to invest in. The company is too dependent on BTS as the 7-man group accounted for 87.7% of its revenue in H1FY20. The high dependency is not a positive sign.
Moreover, able-bodied men in Korea are required to mandatorily serve in the Korean military for two years. Mistaken news of a hiatus led to a 34% crash, a mandatory conscription for 2 years might delist the company altogether. Certain politicians are fighting to exempt the group from service due to their contribution to the country, but nothing is certain as of yet.
As such, a company with such dependency on a particular business vertical may not be the best investment for an investor.
Article by Aman Agarwal.
This news piece is brought to you in association with jobaaj.com
