Although BABYMONSTER’s debut has been confirmed, estimations on YG stocks are not very positive
It is said that even with the rookie girl group’s debut and TREASURE’s scheduled Asian tour, a big reverse in stock performance is inevitable in this period compared to that of last year when BLACKPINK was holding a world tour.
On November 14th, three of the four major securities companies (Hana, Samsung and Hyundai Motor) issued reports revealing that they had lowered the target stock prices for YG Entertainment. The proposed target stock price is 93,000 won as the maximum and 67,000 won as the minimum.
YG recorded 144 billion won in sales and 21.2 billion in operating profit in the third quarter of 2023. In line with the stock market’s estimations, it increased 25.6% and 36.5%, respectively, compared to the same period of last year. YG’s sales showed an opposite pattern as it recorded a decrease of 26% in sales year-on-year. However, the market growth rate still rose thanks to the large number of 620,000 concert viewers (0 viewers in the same period last year) thanks to BLACKPINK’s tour.
However, the activity index for YG in the fourth quarter of 2023 hit the red line. The company’s physical sales and concert audiences are expected to drop by 20% and 84%. In the current situation when it is unclear whether BLACKPINK will renew their contract, a significant decrease in the size of concerts is predicted. As such, TREASURE and BABYMONSTER need to fill the gap. In reality, the “minus” caused by BLACKPINK’s hiatus is greater than the “plus” that those two groups will bring.
Samsung Securities researcher Choi Min-ha said, “It is regrettable that there has been no official announcement on BLACKPINK’s contract renewal although their contracts already expired in August. I believe that this is the first thing YG needs to solve right now”. Hyundai Motor Securities researcher Kim Hyun-yong added, “There’s a possibility that YG stock will rebound for a short term with BABYMONSTER’s debut, but it is not really appealing to investors at this moment”.
However, NH Investment & Securities researcher Lee Hwa-jung pointed out a potential reverse situation, saying “As all the concerns regarding YG are reflected in stock predictions, it is true that BLACKPINK’s contract renewal and BABYMONSTER’s debut would definitely boost the upward trend the greatest”.
