SEOUL • Big Hit Entertainment, the management label of South Korean superstar K-pop group BTS, hit the stock market with a 9.6 trillion won (S$11.4 billion) valuation yesterday before worries over its narrow revenue stream pulled shares below the debut price.
Big Hit, which relies heavily on the boy band for revenue, opened at 270,000 won - double its initial public offering (IPO) price - and surged by as much as 30 per cent in early trade before dropping back to just under the list price.
Interest in South Korea's third largest IPO of the year was high, with almost half of Big Hit's 10 million tradeable shares changing hands yesterday morning, according to the Korea Exchange website.
Analysts say the company has proven itself online savvy, using YouTube and social media for market infiltration since in-person performances were cancelled because of the coronavirus pandemic.
But there are some concerns about Big Hit's reliance on its star artists. The Billboard Chart-topping BTS, which have a huge global following, accounted for 87.7 per cent of the label's revenue in the first half of this year, according to a regulatory filing.
It is a scenario common among South Korean entertainment companies and one investors are familiar with, but it makes revenue especially vulnerable to any disruptions in output from key talent.
"The industry undergoes a lot of fluctuations," said Hyundai Motor Securities analyst Kim Hyun-yong, citing potential obstacles such as the country's mandatory military service. That service is looming for BTS, with the eldest member of the band currently required to sign up by the end of next year and the remaining six members over the following five years.
Yesterday's float made the band members instant multi-millionaires, with each granted shares worth 18.5 billion won at the debut price, but BTS' official Twitter account did not reference the listing, focusing instead on the group's win at the coinciding United States Billboard Music Awards for Top Social Artist.
Analysts said BTS' successful online concerts have partly made up for performances cancelled due to Covid-19. Additionally, Big Hit's unprecedented level of control over its revenue streams via its Weverse fandom platform that distributes BTS content and sells merchandise, differentiate the label.
REUTERS
