Who should be held accountable for BTS label's stock plunge?

K-pop sensation BTS’ decision to temporarily split up and launch solo careers was made known after a pre-recorded video came out Wednesday of the seven stars drinking and opening up around the dinner table.

It wasn’t clear whether the unexpected decision was taken in view of the mandatory military service requirement for all able-bodied South Korean men, or because they were burned out after performing as a team for the past nine years without a break.

Some members of the boy band, led by 30-year-old RM, confessed to their fatigue after releasing a total of 16 albums, or one album about every six months.

Its fan club ARMY generally voiced support for the BTS members’ new chapter as individual artists.

But the news about the global superstar group’s temporary split angered many shareholders in its label HYBE Co., shares of which nosedived to their record low at one point on Wednesday.

About 2 trillion won ($1.6 billion) was wiped off the HYBE stock on the same day. Shareholders, including its 157,000 minority shareholders, were upset about the way such an important, stock-moving decision was revealed.

But HYBE remains tight-lipped, arousing suspicion among investors that the entertainment giant might have been tipped off in advance of BTS’ plan to take a hiatus.

Underscoring the suspicion, the HYBE stock declined in the three consecutive sessions up to June 14 at a steeper pace than the broader Kospi index, just before the release of BTS’ pre-recorded dinner.

On June 13 alone, the stock plunged 11% with no clear reason, versus a 3.52% drop in the Kospi. It was known that the video stream had been recorded several days before its release.

On June 15, BTS’ youngest member Jung Kook tried to calm its fans and investors, saying on his Youtube channel that the hiatus does not mean the group will stop its music activities as a team.

HYBE crawled up 2% on Thursday, not enough to recover the losses made over the past four sessions. BTS accounts for 80-90% of HYBE's revenue.

RESPONSIBILITY AS LISTED COMPANY

Music critics pointed out that the stock market listings of entertainment companies, including HYBE and Blackpink’s label YG Entertainment, put them under intense pressure to make profits.

To do so, they have to release new songs more frequently than before, which results in singers being treated as products and triggers the artists' physical and emotional exhaustion.

From the shareholders' point of view, however, HYBE -- as a listed company -- is required to protect shareholder value.

Back in October 2020, HYBE founder and Chairman Bang Si-hyuk pledged during a commemorative speech for its stock market debut that he will endeavor to improve shareholder value in various aspects such as transparency, profitability and growth potential.

Given that, it was inappropriate for the global superstar group to announce the stock-moving news while dining and drinking 30-year-old whiskey.  

Bang holds a 31.8% stake in HYBE as the largest shareholder as of end-March, followed by Netmarble Corp., founded by his elder brother Bang Jun-hyuk, with 18.2%.

South Korea’s National Pension Service holds 7.4% as the third-largest shareholder, which is valued at 455 billion won as of Thursday’s market close.

Foreign investors’ ownership of HYBE, which has a market capitalization of 6.2 trillion won, drops to 14.41% on Thursday, compared to 15.1% a day before.

Write to Yoon-Sang Koh at kys@hankyung.com
Yeonhee Kim edited this article.