Hybe shares fall $1.96bn as BTS concerts drag down margins
Hybe posted record second-quarter revenue driven by BTS concerts, but a shift toward lower-margin live events triggered a sharp investor sell-off.
Hybe saw 2.845 trillion won ($1.96 billion) erased from its market capitalization in under 24 hours. This occurred despite the South Korean K-pop agency posting record second-quarter revenue and operating profit.
The selloff was triggered by an operating margin of 11.8% for the quarter. This figure fell short of the 12.7% forecast by SK Securities and the 12.2% expected by Eugene Securities. Investors reacted to the structural reality of the company's current revenue mix rather than its top-line growth.
Concerts weigh on profitability
Concert revenue surged 243.3% year on year and 630% compared to the previous quarter. This was largely driven by the BTS Arirang tour that launched on April 9 in South Korea. While this drove record results, live events carry significantly lower margins because a higher proportion of the revenue is paid out to artists.
"The higher proportion of tour revenue brought higher artist-settlement costs, which caused profitability to fall short of expectations," said SK Securities analyst Park Jun-hyung in a July 29 note. This dynamic highlights the tension between driving absolute growth and protecting profitability.
IM Securities analyst Hwang Ji-won echoed this view, describing mature-artist concert revenue as relatively low-margin. The market had originally anticipated that the quarter's figures would be led by merchandise sales, which can yield margins as high as 50%, according to Kiwoom Securities analyst Lim Soo-jin.
Brokerages point to future growth
Despite the immediate stock decline, all five brokerages reviewed maintained a positive stance on the company's fundamentals. Analysts are looking past the current margin compression toward a pipeline of higher-margin opportunities.
Lim pointed to additional merchandise production scheduled for the second half of the year. She also cited an expansion of tours from new groups Cortis and Katseye as a catalyst to support future earnings. IM Securities highlighted promising growth from rookie groups and the return of girl group NewJeans.
NewJeans had been one of Hybe's most successful rookie acts before becoming entangled in a long-running contract dispute starting in 2024. A South Korean court ruled in December that the group's contract with Hybe subsidiary ADOR remains valid, keeping them bound to the agency until 2029.
To support future revenue, Hybe outlined an aggressive touring schedule. The company expects more than 200 concerts across all its artists in the second half of 2026, adding to the 119 held in the first half. This combined total represents the company's largest touring schedule since 2021.
