Stock Price Plummets 60% Despite Record Earnings...HYBE Faces Internal Risks and Profit Concerns

HYBE’s stock price has collapsed by 60%, dropping from its 52-week high of 418,000 won to around 160,000 won recently. Despite recording the highest quarterly earnings in company history, the stock continues to show a downward trend. Prolonged investigations into Chairman Bang Si-hyuk for alleged fraudulent trading and concerns over slowing performance after BTS’s world tour are worsening investor sentiment.

For the second quarter of this year, HYBE reported consolidated sales of 1.45 trillion won and operating profits of 170.9 billion won. These figures represent a 105.5% increase in sales and a 159.3% rise in operating profits compared to the same period last year. HYBE is the first company in South Korea’s entertainment industry to exceed both 1 trillion won in quarterly sales and 100 billion won in operating profits. Half-year sales also surpassed 2 trillion won for the first time. BTS’s world tour and their comeback album drove these strong results.

Securities firms have lowered their target stock prices due to the low profitability of the concert business. Korea Investment & Securities reduced its target price from 400,000 won to 330,000 won, while NH Investment & Securities cut it from 300,000 won to 270,000 won. Industry experts attribute the stock decline to peak-out concerns, suggesting that sales growth may slow down after BTS’s world tour.

Investigations into Chairman Bang Si-hyuk for alleged fraudulent trading are another major factor contributing to the stock drop. He is the founder of HYBE and held the largest shareholding at 30.86% as of the end of last year. Currently, he is accused of deceiving existing investors, including those who invested before HYBE’s IPO and venture capital firms, by claiming there were no plans for an IPO, instead allowing his acquaintance to establish a private equity fund to purchase his shares.

According to a survey conducted by the Korea CXO Research Institute on the stock value of CEOs of 46 major South Korean groups as of the second quarter, Chairman Bang experienced the largest decline. His stock wealth dropped to 1.4058 trillion won in the first quarter, with a decline rate of 35.8%, the highest among all surveyed individuals.

Fraudulent trading refers to unfair trading practices that involve deliberately deceiving investors or distorting the market when buying and selling stocks or other financial investment products. If the profits gained or losses avoided from such acts exceed 5 billion won, the offender may face imprisonment of over 5 years or even life imprisonment, along with a fine equal to 3 to 5 times the profit. If the total illegal profit amounts to 400 billion won, a fine of at least 1.2 trillion won must be paid.

The Financial Crime Investigation Team of the Seoul Central Police Agency’s Special Investigation Unit conducted searches at HYBE’s headquarters and the Korea Exchange last year and repeatedly summoned Chairman Bang for investigations.