Stealthy Ascent: K-pop Equities Primed for Boost in Second Half
In the dynamic world of K-pop, the major labels - Hybe, SM, YG, and JYP - have been navigating through a mix of growth and challenges. While the broader market saw gains of 4% and 2.5% in July, these labels experienced an average decline of 9%. However, industry analysts are optimistic about their future prospects.
Revenue Boost and Operating Profit Growth for Hybe
Hybe, the label behind BTS, has been a standout performer. The company recorded a 10% increase in revenue to 705.6 billion won ($507 million) and a 29% rise in operating profits in the second quarter. These figures are a testament to the global appeal of BTS and the strength of their fanbase, known as ARMY.
JYP's Anticipated Strong Second-Quarter Earnings
Industry expectations for JYP's second-quarter earnings are strong, with predictions of a nearly 100% increase in revenue and a 60% rise in operating profit. This optimism is driven by the success of groups like SEVENTEEN and ENHYPEN, which have contributed significantly to tour revenues.
Strategic Partnerships and International Tours
The current growth drivers for K-pop stocks, particularly for Hybe, SM, YG, and JYP, are primarily linked to the global resurgence of major acts, international touring, and strategic partnerships emphasizing fan engagement and digital expansion. The return of major acts like BTS and Blackpink, expected to boost market recovery and revenue growth by late 2025, is a significant factor.
Innovation in Fan Engagement Platforms
Innovation in fan engagement platforms, such as Tencent Music’s collaboration with SM Entertainment and Korean artists, and adoption of fan community tools like “Bubble” that monetize direct artist-fan interaction via subscriptions, are proving effective in sustaining long-term engagement and generating recurring revenue.
Government and Industry Support
Government and industry support for cultural export policies, including tax and institutional support initiatives under South Korean policy frameworks, aim to bolster the sustainability of K-pop production companies like SM, YG, and JYP in a competitive global market.
New Group Launches and Diversification Efforts
New group launches and diversification efforts planned by major agencies to revitalize the market, despite challenges in breakout rookie girl groups domestically, signal a balance between expansion and capacity optimization.
Stock Market Performance
As of Friday, SM, YG, and JYP closed at 140,200 won, 93,200 won, and 79,800 won per share, respectively. Hybe's stock closed at 291,000 won per share, a 12% rise in August. The stock had dropped 24% from June's peak to 246,000 won on July 30 due to legal risks surrounding founder Bang Si-hyuk. However, by the first week of August, the four K-pop stocks had recouped July's losses, surging 9.5% driven by strong second-quarter earnings and signs of an industry-wide recovery.
YG returned to profitability, reporting an operating profit of 8.4 billion won, supported by Blackpink's world tour. Market watchers downplayed a lasting impact from Bang's legal troubles on the stock price.
Future Growth Drivers
Analyst Choi Min-ha of Samsung Securities expects Hybe's growth from 2026 onward due to an expanding artist roster and accelerating earnings momentum. Lee Ki-hoon of Hana Securities states that the key investment drivers in K-pop are large-scale world tours by high-profile IPs and a sharp rise in merchandise sales.
SM secured Tencent Music Entertainment as a major stakeholder in May, which is expected to enhance synergies in areas like IP production, concerts, merchandise, and visual content. This strategic move underscores SM's transformation and the growing potential for K-pop's monetization.
In summary, Hybe, SM, YG, and JYP’s stock growth prospects hinge on leveraging global fandoms, expanding concert and digital revenue streams, enhancing fan experiences through tech, and benefiting from supportive government policies, even as the domestic K-pop market faces some consumption declines.
- In light of the global appeal and strong fanbase of BTS, Hybe, a K-pop label, has experienced significant growth in revenue and operating profits.
- industry analysts anticipate strong second-quarter earnings for JYP due to the success of groups like SEVENTEEN and ENHYPEN.
- Strategic partnerships with companies like Tencent Music, international tours, and innovation in fan engagement platforms are current growth drivers for K-pop labels, including Hybe, SM, YG, and JYP.
