BTS’ concerts power Hybe to record results but shares crash
EAST RUTHERFORD, NEW JERSEY – JULY 19: RM, Jin, Suga, J-Hope, Jimin, V and Jung Kook of BTS perform during the Topps Final Halftime Show in the FIFA World Cup 2026 Final match between Spain and Argentina at New York New Jersey Stadium on July 19, 2026 in East Rutherford, New Jersey. (Photo by Carl Recine/Getty Images)
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Despite the success of BTS powering South Korea’s largest K-pop agency Hybe to a stellar set of second quarter results, the agency saw as much as 2.845 trillion won ($1.96 billion) wiped from its market cap in less than 24 hours.
Shares of Hybe tanked 16.09% on Tuesday, marking its worst day since June 2022. It then extended losses to tumble as much as 16.31% on Wednesday to its lowest since September 2024.
The stock move was triggered by a miss in profit-margin expectations despite revenue and operating profit reaching record highs, according to analysts.
While concert revenue was the main driver of the record results, analysts said that concerts see more of their revenue paid out to the artists than the company, resulting in lower margins.
Concert revenue spiked 243.3% year on year and a whopping 630% compared to the previous quarter. This was mainly powered by BTS’ Arirang tour, which started on April 9 in South Korea.
Hybe’s operating margin for its second quarter stood at 11.8%, below SK Securities expectations of 12.7% and also falling short of the 12.2% expected by Eugene Securities.
In a July 29 note, SK analyst Park Jun-hyung said the higher proportion of tour revenue brought higher artist-settlement costs, which caused profitability to fall short of expectations.
Park’s assessment is echoed by IM Securities analyst Hwang Ji-won, who described mature-artist concert revenue — like BTS — as relatively low-margin, adding that the higher concert mix increased cost pressure.
The market had expected that revenue figures would be led by merchandise sales, which carry a higher profit margin, according to Kiwoom Securities analyst Lim Soo-jin. Margins for merchandise can go up to 50%, analysts previously told CNBC.
Hybe said in its earnings release that more than 200 more concerts from all its artists are expected in the second half of 2026, in addition to 119 concerts in the first half, which together would be the most for the company since 2021.
‘Incomprehensible’
All five brokerages reviewed by CNBC still struck a positive note on the company, with Kiwoom’s Lim saying that additional merchandise production in the second half, as well as an expansion of tours from new groups Cortis and Katseye are likely to support future earnings.
SEOUL, SOUTH KOREA – APRIL 20: CORTIS members Juhun, James, Seong-hyun, Geon-ho and Martin attend the media showcase for the group’s second mini album ‘Green Green’ and title track ‘Red Red’ at YES24 Live Hall on April 20, 2026 in Seoul, South Korea. (Photo by THE FACT/Imazins via Getty Images)
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IM Securities also pointed to promising growth by rookie groups, as well as the return of girl group NewJeans to help Hybe’s earnings.
NewJeans had been one of Hybe’s most successful rookie groups until it was involved in a long running contract dispute with Hybe starting from 2024.
In December, a South Korean court ruled that NewJeans’ contract with Hybe subsidary ADOR remains valid, which means that NewJeans are still contractually bound with ADOR until 2029.
Haerin, Danielle, Hanni, Minji and Hyein of NJZ, then known as NewJeans, attend a press conference on Nov. 28, 2024 in Seoul, South Korea, where they said they had terminated their contracts with their managing agency Ador.
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— CNBC’s Jenny Lee contributed to this report.