Decline in Stock Prices of Korea’s Four Major K-Pop Companies

BTS is once again touring around the world, while Stray Kids are selling out venues globally. aespa and BABYMONSTER are also rapidly expanding their overseas fanbases. However, contrary to the brilliance of the K-Pop industry, the stock market shows a different picture. Over the past six months, the stock prices of South Korea’s four major entertainment companies have all declined.

HYBE’s stock dropped by 48.9%, JYP Entertainment’s by 41.4%, and YG Entertainment’s by 23.3%. In contrast, SM Entertainment experienced the lowest decline rate at 9.2%. The sharp drops in HYBE and JYP’s stock prices are attributed to their excessive reliance on a single mega IP—HYBE heavily depends on BTS, and JYP relies heavily on Stray Kids.

Despite high revenue, HYBE has recorded low net profits. The company’s gross profit margin fell from 43% in the first quarter of this year to 32% in the second quarter. Although concert revenues increased as BTS’s world tour fully took effect, costs related to artist compensation and production expenses also rose. Last year, HYBE generated revenue of 2.6499 trillion won but incurred a net loss of 239.8 billion won. As BTS’s contracts are renewed, the proportion allocated to artist compensation continues to increase over time.

While Stray Kids currently serve as JYP Entertainment’s main driver of growth, the company lacks a clear successor. TWICE faces uncertainty regarding group activities, and NMIXX has just begun its first world tour. A researcher from Sangsangin Investment & Securities stated in a report, “Groups like NEXX and Kep1er, aside from Stray Kids, have failed to generate sufficient revenue. It is urgent to expand IP across younger age groups.”

Key Reasons for the Stock Price Decline HYBE’s stock price has nearly halved over the past six months, and JYP Entertainment’s has also dropped by almost half. This is due to the two companies’ excessive dependence on BTS and Stray Kids. Although HYBE achieved high revenue thanks to BTS’s success, its net profits remain low because of rising costs for artist compensation and production. As a result, SK Securities lowered its target stock price for HYBE to 290,000 won. The researcher noted that “reducing reliance on BTS and acquiring new IPs is essential.”

SM Entertainment’s Distinctive Performance Among the four companies, SM Entertainment’s stock experienced the lowest decline rate. This is attributed to SM’s diversified IP strategy and stable roster of artists. In addition to BTS and Stray Kids, SM has a variety of artists, with both group and solo activities ongoing. This enables SM to maintain relative stability amid stock price volatility.

Future Outlook and PER Analysis According to forward P/E ratios, JYP Entertainment’s ratio is 11.7 times as of 2026, while YG Entertainment and SM Entertainment each have a ratio of around 15.6 times. HYBE’s ratio is 35.2 times, nearly three times that of JYP. A P/E ratio of 12 implies that investors expect roughly 12 years’ worth of earnings based on current profits. While a low P/E ratio often indicates undervaluation, it can also reflect poor performance. Sangsangin Investment & Securities projected SM Entertainment’s revenue for 2024 at 806.6 billion won and operating profit at 141.3 billion won—representing decreases of 1.9% and 9%, respectively, compared to the previous year.