HYBE & SM Stock Price Declines Despite NewJeans & aespa Comebacks

According to Korea Exchange, as of 9:47 a.m., HYBE’s stock price was trading at 100,300 won, showing a 2.06% decrease from the previous trading day. Despite surpassing 200,000 won in the last two trading days, HYBE’s stock price dropped below 200,000 won in the beginning of today’s session. At one point, it even reached a low of 199,000 won.

Simultaneously, the stock price of SM Entertainment on the KOSDAQ market is currently at 92,200 won, indicating a decline of 3.76% compared to the previous trading day. At one point, the stock price even dropped to 90,100 won, nearly reaching the 90,000 won mark.

Previously, HYBE had made a declaration that they intended to sell 755,522 shares of SM at a price of 95,531 won per share prior to the opening of the market. As a result, HYBE has divested a portion of their ownership in SM for a total of 68.4 billion won.

During the previous day’s demand survey, HYBE had intended to sell a minimum of 750,000 shares and a maximum of 940,000 shares at a discounted rate of 4-5.5%. However, in the block deal, only the minimum quantity was sold and the maximum discount rate was implemented.

Last February, HYBE purchased a 14.8% stake in SM from former SM executive producer Lee Soo-man at a rate of 120,000 won per share. Through a public tender offer, HYBE was able to secure an additional 0.98% stake in a dispute with Kakao and SM over management rights. After Kakao sided with HYBE, the company responded to the offer and reduced its stake to approximately 8%. However, HYBE’s stake increased to 12.58% due to Lee Soo-man exercising his remaining 3.65% stake put option.

As a result of the block deal, it is estimated that HYBE incurred a loss of 22.3 billion won from their transaction involving SM shares. Despite the comebacks of both HYBE and SM artists, the block deal has overshadowed their activities.

On the 24th, both NewJeans from HYBE and RM from BTS made their comebacks simultaneously. In the case of SM, their flagship group aespa held a showcase on the 27th to mark their official return to the K-pop scene with the release of their full album “Armageddon”.

At present, HYBE’s stock price is anticipated to experience a crucial moment in the near future as the court ruling on the injunction filed by ADOR’s CEO Min Hee-jin against HYBE is expected to be announced before the shareholders’ meeting on May 31st. In light of this, Park Soo-young from Hanwha Investment & Securities commented, “The market will remain on hold until a resolution is reached in the management rights dispute between HYBE and ADOR”, and further emphasized the importance of observing HYBE’s actions in response to this issue.

Moreover, the potential lifting of China’s ban on Korean cultural content could also greatly affect the stock prices of HYBE and SM. According to Ahn Do-young, a researcher at Korea Investment & Securities, “If concerts are permitted in China, SM could earn over 10 billion won per tour, making it the top earner. YG would come in second, with JYP and HYBE seeing the least financial gain from this change.”