S. Korean pop band BTS triggers $1.7-bn stock rout on shift to solos

Shares of Hybe Co., the agency that manages the South Korean pop phenomenon BTS, plunged by a record after the band said its members will focus on individual projects for a while.

Hybe sank as much as 28% on Wednesday in Seoul, touching its lowest level on record since its trading debut in October 2020 and wiping out as much as $1.7 billion in market value. The stock pared the loss to finish 25% lower, after the agency said the group will “remain active as a team.” Shares are down nearly 60% this year, significantly underperforming the broader equity benchmark.

Bangtan Boys, more commonly called BTS, made the announcement to pursue solo projects in a YouTube video post that has already attracted more than 10 million views. The singers said the time apart would be healthy for the band and urged fans not to take the development as negative. 

“I felt like I needed time to spend on my own,” the group’s leader RM said in the hour-long video, which features the band discussing past successes as well as each other’s quirks while sharing food and wine. “It’s not like we’re disbanding,” another member known as Suga said.

BTS will “remain active as a team while taking individual journey to further achieve personal growth,” Hybe said in a statement.

In the nine years since their debut, BTS has racked up record-breaking hits and video views, including the fastest accumulation of No. 1 songs on the Billboard Hot 100 since Michael Jackson. The group also became the first Asian group since 1963 to top Billboard’s all-genre Hot 100 chart with their English-language single “Dynamite.” At the end of May, the seven members met with US President Joe Biden at the White House and spoke out against hate crimes. 

Cultural Loss
 

BTS is so huge that a government minister fretted that it would cause a “cultural loss for mankind” if the band had to suspend its work to enlist. Military service is mandatory for men in South Korea, which is still technically at war with North Korea. 

The band’s oldest member Jin, 29, needs to sign up for military service before the end of this year unless a related law is revised to allow for an exemption.  

Worries about the band’s future had battered Hybe shares even before Wednesday’s plunge, as the agency relies on the hitmaker for most of its sales. The slump means that the entertainment firm has given up almost all gains since its trading debut. 

Hybe may face sharp downgrades to its profit and revenue estimates this year and next year, said Lee Hyein, an analyst at Yuanta Securities Korea Co.  

If Hybe confirms that BTS won’t resume concerts this year, its revenue in the period will likely be 25% lower than previously estimated, while profit will be cut as much as 33%, Lee wrote in a note.