BTS’s management company is in trouble

Shares of Hybe Co., fell 25% in just one day last week following BTS' announcement.

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It was supposed to be an anniversary for the seven-member South Korean pop group BTS and its massive global fan base. In just 2 months, they performed for more than 200,000 people in Las Vegas, visited the White House and released the album “Proof”.

For more than half an hour, the pop stars ate, drank, joked and reminisced around a table framed by dozens of purple balloons. After being teased about looking sleepy, J-Hope – who just a few days earlier had made history when he was honored as the featured artist at the Lollapalooza festival in Chicago, gave accurate information about it. group’s future. All 7 will be solo.

The BTS Army, the group’s huge fan base, saw this hiatus as the end of an era. And with it, the fortunes of Bang Si-Hyuk, the Korean billionaire behind the boy band that took the world by storm, also followed.

Shares of Hybe Co., founded by Bang, fell 25% in just one day last week following BTS’ announcement. It also extended the company’s months-long slide and slashed State’s assets, $2.6 billion from its November peak to $1.2 billion , according to the Bloomberg Billionaires Index. Stocks hit a record low on Wednesday, even though BTS has promised to reunite one day.

“Hybe is the house that BTS built,” said Jeff Benjamin, a well-followed K-Pop journalist. “When there’s a change to a top artist or product, people get worried even though it might not be that different.”

Bang, who controls a 31.8% stake in Hybe, founded the company in 2005 following a career as a music producer. In the early years of its formation, the business nearly went bankrupt before having their first hit with group 8Eight’s “Without a Heart” in 2009. BTS released their debut album in 2013.

The Hype leader became a billionaire after the company’s initial public offering in 2020. BTS then teamed up with Halsey, Nicki Minaj and Steve Aoki, appearing on “The Tonight Show Starring Jimmy” Fallon” and “Saturday Night Live”.

Right now, fans camp out days before a free concert in New York’s Central Park for “Good Morning America.” The IPO also gave the band members, all in their 20s, millions of dollars in ownership.

Hybe’s dependence on BTS has always been a concern. The company has tried to diversify, adding new artists and entering different business fields. It has partnered with the operator of South Korea’s largest cryptocurrency exchange to sell NFT tokens and buy Ithaca Holdings, a US media company behind stars like Justin Bieber and Ariana Grande. Last year’s partnership gave both artists Hybe millions of dollars worth of stock.

While it’s still too early to see how successful these new projects will be, BTS’s hiatus is still a shock. SK Securities Co. cut Hybe’s operating profit estimate by 9% to 234.9 billion won for 2022 and 24% to 273.2 billion won for 2023. may increase as the individual projects of the BTS members begin.

A representative for Hybe did not respond to a request for comment on the business situation.

Even when BTS reunites, concerns persist. What the future of Hybe will be when the artists still have to perform military service for about two years is still an open question. The company’s stock is down 60% this year, far more than JYP Entertainment Corp., SM Entertainment Co. and YG Entertainment Inc.

Hyunyong Kim, an analyst at Hyundai Motor Securities Co., said of Hybe, “It’s not about how they will reduce their dependence on BTS. The question is how will they deal with the potential risks stemming from the issue of military service.”