BTS Members Make Millions as Big Hit Shares Surge in IPO
K-pop group BTS’s Big Hit label drops after debut IPO
Big Hit Entertainment’s shares fell on Thursday’s first day of trading. South Korean label executive of K-pop music superstar, globally popular group BTS, has a market valuation of 8.7 trillion won ($ 7.61 billion).
On Thursday, Big Hit Entertainment opened at 270,000 Korean won (about $ 236) per share. This is double the issue price of 135,000 Korean won per share. Stocks continued to rise after the open before declining further. During the first trading hours the share price was more than 90% higher than the issue price.
«The closing price is already approximately equal to the average analyst target price for 2022, based on estimates of increasing profits», – eBest Investment analyst believes & Securities Gina Ahn (Jina An).
Analysts say Big Hit has performed well online, using YouTube, social media, and online gigs to generate income since it is offline Performances have been canceled due to the coronavirus pandemic.
South Korea’s entertainment sector «becomes global», said on Thursday on CNBC Daniel Yu (Daniel Yoo), Head of Global Investment, Yuanta Securities Korea.
«We think the entertainment industry will be a very important industry for the investor (s) for Korea», – said Yu.
However, the analyst admitted that Big Hit Entertainment’s current rating «may be too high», as his addiction to the seven-member South Korean boy band BTS, «very high».
Big Hit Entertainment’s market debut comes amid other blockbuster IPOs such as SK Biopharmaceuticals and Kakao Games that saw a big jump on their first day of trading.
«If you look at the general IPO market, it is really very hot», – said Yu Most investors who have participated in previous public listings such as SK Biopharmaceuticals, «received from 100-200% profit by prior subscription if they could receive shares», he added.
This is partly due to «huge liquidity» in the markets of South Korea.
The Bank of Korea is currently holding its benchmark rate at an all-time low as the world’s major central banks cut interest rates in an effort to prop up financial markets during the coronavirus pandemic.
Concerns continue to arise that Big Hit is relying on its celebrity artists, making the label’s revenues particularly vulnerable to any disruption to their performance. BTS, which has a huge following worldwide, accounted for 87.7% of the label’s revenue in the first half of 2020, according to regulatory filings..
«The industry is booming, but it is also very cyclical and subject to many fluctuations.», – said Kim Hyun Young (Kim Hyun-yong), analyst at Hyundai Motor Securities, citing potential complications such as mandatory military service for all South Koreans.
Earlier this week, BTS faced a barrage of criticism in China after a lead member of the group made comments about the 1950-1953 Korean War. BTS-related social media posts from major brands including Samsung, FILA, and Hyundai subsequently disappeared from Chinese e-commerce platforms.
The Thursday flotation made the group members multimillionaires, each of whom received KRW 17.6 billion ($ 15.39 million) shares at closing price.
Analysts believe BTS’s successful online concerts and Big Hit’s unprecedented level of control over revenue streams through its Weverse fandom platform, which distributes BTS content and sells merchandise, make the label stand out from the crowd..
«While live gigs are not possible yet, Big Hit’s results in the first half of this year show that fan content and merchandise was profitable.», – said analyst at KTB Investment & Securities Nam Hyo-ji (Nam Hyo-ji).
Founder and co-CEO of Big Hit Bang Si Hyuk (Bang Si-hyuk) said the company will continue «research, challenge, discover innovative business models and apply them for further growth in the global market».