HYBE’s declining stock prices reportedly have Mirae Assets awaiting BTS’ return

HYBE Corporation's investors, Mirae Asset Securities, have been reportedly concerned about the plummeting stock price of the entertainment company. According to Chosun Daily, it is due to the military enlistment break of the K-pop group BTS. BTS members RM, Jin, Suga, J-Hope, Jimin, V, and Jungkook currently serve in the military.

The K-pop idols often go on a break from releasing music when completing their national duties. Reportedly, Mirae Assets Securities is waiting for the group to return in 2025 as their expectations with the agency HYBE have yet to be met.

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HYBE’s plummeting stock prices have Mirae Assets reportedly anticipating BTS’ comeback

According to the Korea Exchange, the corporation's stock price fell below 200,000 won for the first time in three months on February 1. On February 8, HYBE closed trading at 200,000 won, seeing a 1.32% rise from the previous trading day. Mirae Assets Securities has provided substantial funds to the agency. However, the stock price has not been increasing.

The company has invested over 150 billion Korean Won in the corporation, and they have been keeping a close eye on the stock price. Furthermore, in November 2021, they also bought convertible bonds from the company worth 390 billion Korean Won.

The investors had the option to convert their stocks since November 2023. Still, due to missing adjustment conditions for the conversion price, the time to re-occupy the investment has been delayed. Mirae Asset Securities can execute a put option from September to get back their payment from the company. However, they can only recover the principal amount through this process.

According to a close IB industry source,

“At the time of HYBE’s issuance of convertible bonds, the outlook for the stock price was optimistic, making it an appealing investment opportunity. This is why Mirae Asset Securities accepted unfavorable terms.”

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Other factors that are affecting HYBE's stock price

South Korean government policies, like the Corporate Value-Up Program, may make Netmarble one of the major shareholders of the corporation to sell off their shares to pay their debts. In November 2023, Netmarble sold 6% of their stakes for 523.5 billion Korean Won, which resulted in the stock price plummeting by 10% for four trading days.

South Korean entertainment companies have reportedly been facing a crisis as album sales continue to decline, which reflects the success of the entertainment companies. A significant decline in original sales predictions can be attributed to Chinese fans' decreased bulk album purchases since the second half of 2023.

An Industry expert, Kim Kijoo, CEO of KPI Advisors, said,

"Despite the decline in bulk purchases from China, HYBE’s popular groups achieved their highest album sales records last year."

He further highlighted that NewJeans and LE SSERAFIM's album sales revenue in the first quarter of this year could help lower the concerns about the South Korean Entertainment industry. He said,

"If the album sales of LE SSERAFIM and NewJeans, expected to return in the first quarter of this year, perform well, concerns surrounding the South Korean entertainment industry, particularly HYBE’s stock price, are likely to dissipate."

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BTS members Jin and J-hope are expected to be discharged from military service in June and October, respectively, this year. The discharge dates of RM, Suga, Jimin, V, and Jungkook have yet to be revealed.