Lack of a Second BTS or BLACKPINK Drives 20% Downgrade in K-pop Agency Target Prices

Stock prices of domestic K-pop agencies are showing weakness. Although total operating profits for this year are expected to reach approximately 982.2 billion won, marking the highest performance on record, investors’ confidence is actually declining.

Target prices for the four major entertainment companies have been broadly reduced. SM Entertainment’s target price was lowered by 18.8% to 130,000 won, HYBE’s dropped by 15.6% to 380,000 won, YG Entertainment’s fell by 13.3%, and JYP Entertainment’s by 9.3%. Recently, HYBE’s stock price dropped by 7.75% within a week, while JYP’s declined by 0.83%.

The main reason cited by securities firms for these price cuts is the “lack of a second BTS or BLACKPINK.” Tour scale serves as a measure of a global fanbase’s strength and is a key driver for high-margin revenue from merchandise (MD) and content sales. However, new artists are failing to meet expectations in terms of tour scale. In SM Entertainment’s case, it was pointed out that even among its more experienced artists, there is no group capable of undertaking large-scale tours. Lee Hyun-ji, a researcher at Yujin Investment Securities, commented, “While the number of attendees per concert is increasing, there are no major artists to expand the overall scale. It is necessary to further prove success in North America and strong concert attendance.”

Human resource risks are also holding back the industry. The departure of Heeseung from the HYBE-affiliated label BilllieLab’s group ENHYPEN and Mark from SM Entertainment’s group NCT127 is having a negative impact on fanbase strength and corporate performance forecasts.

The situation for JYP Entertainment is even more severe. This year in October brings the contract renewal season for its flagship group TWICE, coinciding with the military enlistment period for another major artist, STRAY KIDS. This has heightened concerns that both of its key revenue-generating groups could face gaps in activity simultaneously.

Although HYBE recorded its highest sales figure on record at 2.65 trillion won in 2024, its operating profit dropped sharply to 49.9 billion won, a 74% decline from the previous year. An analyst at Yujin Investment Securities noted, “Profitability is likely to remain under pressure” because “the proportion of revenue coming from BTS is increasing, raising cost ratios, and album serta tour-related expenses are recognized in advance.”