Entertainment Stocks Dipped into a Slump... Will They Recover in Q2?

JYP Entertainment, YG Entertainment, and SM Hit New Lows Together on the 7th
Entertainment Stocks Continue to Decline Since Early Year
Gradual Recovery Expected After Q1

Entertainment stocks continue to struggle to escape the slump in stock prices that has persisted since the beginning of the year, with several recording 52-week lows in succession. However, there are forecasts that gradual stock price recovery will be possible after the first quarter, as the early part of the year was a seasonal low period with a gap in activities.

According to the Korea Exchange on the 8th, JYP Ent., YG Entertainment, and SM Entertainment all recorded 52-week lows during the trading session the previous day. All three stocks fell for five consecutive trading days. JYP Ent. dropped to 66,300 KRW during the session, marking a 52-week low, falling nearly 4% that day. YG Entertainment also hit a 52-week low at 39,200 KRW during the session. It closed at 39,500 KRW, down 1.25%, breaking below the 40,000 KRW mark. This is the first time since November 2020 that YG Entertainment’s closing price fell below 40,000 KRW. SM Entertainment also recorded a new low, dropping to 70,000 KRW during the session.

Although not recording a new low, HYBE also continued its decline for five consecutive days. HYBE’s stock price, which was in the 200,000 KRW range at the end of last month, fell to the 180,000 KRW range.

Since the beginning of the year, entertainment stocks have continued to underperform. Compared to the start of the year, JYP Ent. has fallen 34%, YG Entertainment 17%, SM Entertainment 24%, and HYBE 23%. Seasonal low periods and poor album sales have contributed to the weak stock performance. Researcher Lee Hwan-wook from Yuanta Securities explained, "Initially, we expected the stock trend of entertainment companies this year to show a clear pattern of higher prices in the first half and lower in the second half. However, the first half is a period where the base effect from the sharp decline in Chinese group-buying volumes continues, coinciding with the largest seasonal low in the first quarter, leading to weak stock prices. Since the beginning of the year, entertainment companies with declining album sales have shown a more pronounced downward trend, and recently, issues such as dating rumors have further worsened investor sentiment, causing additional stock price declines."

Being completely excluded from market themes also negatively impacted stock prices. Researcher Ji In-hae from Shinhan Investment Corp. said, "Since the beginning of the year, entertainment stocks have been among the most severely affected sectors in the stock market. This is largely because they have been completely excluded from market themes; they have not been included in either the artificial intelligence (AI) theme at the start of the year or the current low price-to-book ratio (PBR) theme."

However, there are expectations for gradual stock price recovery after bottoming out in the first quarter. Researcher Lee said, "The combined sales volume of back catalogues from the four major entertainment companies in the first quarter of this year (accumulated through the third week of February) has surpassed the sales volume of the fourth quarter of last year, and the full-scale artist comeback rush scheduled from the second quarter is expected to lead to the expansion of global fandoms. From the second half of this year through next year, activities of mega K-pop artists such as BTS and BLACKPINK can also be anticipated, which will gradually continue the stock price recovery trend."

Researcher Ji also said, "The first quarter is generally a period when entertainment companies take a break from activities, so the lack of any good news was one of the reasons for the adjustment in entertainment stocks. The momentum from new artist debuts, major artist comebacks, and BTS Jin’s discharge from military service in June will all start to spread from the transition between the first and second quarters."

This content was produced with the assistance of AI translation services.