YG Entertainment, one of the “Big 4” K-pop agencies, is experiencing a significant earnings slump. The absence of its leading group, BLACKPINK, has left a gap that the company’s intellectual properties (IP) have yet to fill. Analysts predict that it will be the latter half of this year before YG can potentially see an improvement in its financial performance.
Kim Hye Yeong, a researcher at DAOL Investment & Securities, stated on the 16th, “YG Entertainment’s consolidated sales for the second quarter are projected to decrease by 35.8% year-on-year to 101.7 billion KRW (approximately 73.4 million USD), with operating profit dropping by 98.9% to 300 million KRW (approximately 217,000 USD).”
She added, “The main contributors to YG’s second-quarter performance will be the album sales of BABYMONSTER and the concert revenue from TREASURE. However, with only two group IPs active this year, one of which is a rookie group, the profitability outlook is unfavorable. The focus should be on next year’s performance rather than this year’s.” Consequently, Kim lowered YG Entertainment’s target stock price from 55,000 KRW to 46,000 KRW (approx 40 and 33 USD, respectively).
YG’s stock price has also been falling sharply alongside its financial expectations. The stock closed at 36,750 KRW, down 1,150 KRW (3.03%) from the previous day. This marks a 62% drop from its peak of 97,000 KRW in May last year.
Previously, YG and BLACKPINK renewed their group activities contract, but the members did not renew their contracts for individual activities. Analysts believe this uncertainty surrounding BLACKPINK’s group activities is negatively impacting both stock prices and earnings.
Kim noted, “The delay in IP generation has led to an earnings drought. For sustainable growth, the success of BABYMONSTER and new IPs is essential. YG needs to address concerns about its production system.”
Hyundai Motor Securities researcher Kim Hyun Yong also commented on YG’s situation, stating, “YG is currently enduring a difficult period. The key to next year’s performance recovery will be the resumption of BLACKPINK’s full-group activities, and BABYMONSTER needs to follow in BLACKPINK’s growth trajectory in the long term.”
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