YG’s current situation is complex. All members of BLACKPINK have terminated their individual exclusive contracts. Ahyeon, the core Korean member of the rookie girl group BABYMONSTER, is no longer part of the lineup.
With no clear growth drivers, analysts caution against buying YG stocks in the near future, emphasizing the uncertainty of when the stock will recover.
According to the Korea Exchange on January 3rd, YG closed at 47,550 won, down 6.58%, or 3,350 won, in the previous day’s trading on the KOSDAQ market.
This comes after YG experienced a surge in stock prices following the news of BLACKPINK members’ group exclusive contract renewal early last month.
Among the four major entertainment companies, YG is the only one witnessing a significant decline in its stock value, directly related to BLACKPINK. Just before the year-end holidays, YG made a bombshell declaration, “We have mutually agreed not to proceed with individual exclusive contract renewals for all four BLACKPINK members.”
Consequently, BLACKPINK members will continue group activities under YG, while pursuing individual activities under their respective agencies.
Already, Jennie and Jisoo have signaled independent career paths. Last November, Jennie established her own label, ‘OA’ (Odd Atelier). Additionally, Jisoo is expected to continue her solo activities in collaboration with her brother’s brand, Biomom, specializing in infant health supplements.
Analysts predict that the fallout from the cancellation of BLACKPINK’s individual contracts will negatively impact investor sentiment. Analyst Kim Hye-young maintained a ‘buy’ rating for YG but significantly lowered the target price from 100,000 won to 70,000 won. In the Korean securities industry, a clear ‘sell’ recommendation is rare, so a ‘neutral’ stance or a substantial target price adjustment is often interpreted as an implicit ‘sell’ signal.
Kim said, “With the cancellation of BLACKPINK members’ individual contracts, there is no choice but to reflect the revenue gap. The direction of YG’s stock price will depend on the success of BABYMONSTER, now a key growth driver for YG.”
Analyst Im Su-jin commented, “The market expected at least one or two BLACKPINK members to renew their contracts, but even that did not happen. This has caused disappointment.”
They further noted, “YG’s annual earnings estimate for this year was based on such observations, making a downward adjustment inevitable.”
Analyst Yoo Sung-man evaluated, “With BLACKPINK gone, the direction of YG’s stock price will be determined by TREASURE and BABYMONSTER, but there are currently no visible signs of an upward momentum.”
As BLACKPINK members embark on individual paths, the burden on the shoulders of TREASURE and BABYMONSTER has increased. Attention is particularly focused on BABYMONSTER, set to release their second single on February 1st.
The question remains whether BABYMONSTER has the influence to achieve results comparable to BLACKPINK. Initial fandom has formed with around 60,000 fans, deemed satisfactory within their debut month, having sold over a million albums similar to LE SSERAFIM.
The absence of a core member remains a significant variable. Ahyeon, nicknamed ‘Little Jennie,’ has been a popular Korean member even before BABYMONSTER’s debut, making her return a potential catalyst for YG’s stock.
Regarding the exclusion of Ahyeon, Yang Hyun-suk explained through an official video, “Due to health reasons, the timing of Ahyeon’s return is still uncertain, and we will announce it publicly later.”
YG shareholders also express frustration. Despite the long period of speculation about BLACKPINK’s contract renewal affecting stock fluctuations, the uncertainty seems to have increased rather than decreased with the continuous bad news.
Some investors even claim, “The announcement of BLACKPINK’s group contract renewal was made after the deadline, and the failure of individual contract renewals was revealed during the year-end break. BABYMONSTER’s debut was also delayed for two months. This seems like stock manipulation.”
Some investors see the current situation as a buying opportunity. One investor remarks, “Even though the stock price dropped from 80,000 to the 50,000 KRW mark, it’s horrifying that it still needs to drop more. Despite facing adversity head-on, it’s holding up better than expected. The lower the stock price, the more I’m considering buying.”
In actuality, institutional and foreign investors sold a combined 11.7 billion won and 6.3 billion won worth of shares, respectively, while individual investors alone absorbed these sell-offs.
Some market observers suggest that when investing in entertainment stocks, selecting companies with a higher proportion of rookies can serve as an indicator. While contract renewal issues with most popular groups are inevitable in the entertainment industry, companies with high dependence on seasoned core artists tend to face greater stock volatility during contract renewal seasons.
An industry insider advises, “Companies with a high proportion of rookies like HYBE and SM, as well as those with well-organized management structures for contract renewals, are relatively better positioned to defend against stock fluctuations.”
