HYBE Stock Rises on Expectations for BTS’s Comeback...Continuous Exercise of Convertible Bond Options

Of the 400 billion won worth of convertible bonds (CB) issued by HYBE last October, 235.5 billion won has been converted into shares in the past three months, reflecting strong investor interest. The conversion price for these CBs was 218,000 won, which was significantly higher than the stock price of around 192,100 won at the time of issuance. Nevertheless, investors began exercising their conversion rights to avoid losses. HYBE’s stock price, which surpassed 300,000 won by the end of October last year, reached 346,000 won on January 2 this year, delivering substantial gains for investors. The stock price, which had dropped to 150,000 won in September 2024, has shown an upward trend recently. Due to a series of issues including BTS member SUGA’s drunk driving offense, disputes with ADOR CEO Minhee Jin, and contract conflicts over NewJeans, investors had demanded early repayment of the principal on their CBs on a large scale. HYBE faced difficulties in response by refinancing 400 billion won worth of CBs, but recent strength in the KOSPI index combined with expectations for BTS’s comeback has increased optimism about further stock price rises. Securities firms are also viewing HYBE’s prospects positively. Lee Hwan-wook, a researcher at UNT Securities, said, “Despite the lack of activity from older IP assets, the rapid expansion of fanbases for diversified younger IP assets has driven overall growth,” and raised his target price from 395,000 won to 420,000 won. IBK Investment & Securities raised its target price from 370,000 won to 420,000 won, while Kiwoom Securities raised it from 380,000 won to 450,000 won. The reason for raising these targets despite poor performance is BTS’s world tour and the release of new music. The BTS world tour, announced on the 14th, will feature 79 performances across 35 cities in 23 countries from April 9 at the Goyang Stadium through the first half of next year. Based on the 43 performances already revealed, the estimated attendance is around 2.8 million people, with an average of 65,000 attendees per show. This figure far exceeds previous estimates of 3 to 3.5 million, and average ticket prices as well as sponsorship revenues are likely to surpass expectations as well. BTS is scheduled to release its fifth studio album on March 20. UNT Securities explained, “Starting with the announcement of the BTS world tour and followed by the release of the fifth studio album, the stock price’s lower bound is expected to rise gradually, and the performance from the tour is likely to ease valuation pressures.” The merchandise sales strategy is also expected to be strengthened compared to market concerns, leading to a significant improvement in the company’s overall performance.