Input 2024.07.20 15:47
Last modified on 2024.07.20 16:19
Hive investment sentiment weakens due to ‘Adore Incident’ and plagiarism suspicions
Second quarter performance is also expected to be poor“Performance will improve as artist activities begin in earnest in the second half of the year”
“Looking forward to BTS’ full group activities next year”… All members to be discharged in June next year
Adore CEO Min Hee-jin, who has completed a police investigation on charges of embezzlement, is answering reporters’ questions at the Yongsan Police Station in Seoul on the followingnoon of the 9th. Photo = News 1 Hive is unable to escape its slump. Although BTS member Jin (real name Kim Seok-jin) has resumed activities following being discharged from the military, investment sentiment has frozen due to the ‘Adore incident’ and the ‘Bubblegum plagiarism controversy.’ Hive IM, its gaming subsidiary, has also not yet achieved any significant results. The securities industry is advising that attention should be paid to next year, when BTS will be able to promote as a full group.
According to the Korea Exchange on the 20th, Hive fell to 178,700 won during trading on the 19th, setting a new 52-week low. This is regarding 40% lower than the 52-week high of 295,000 won recorded on August 8th of last year.
On this day, the stock price closed at 182,500 won, down 1.35% from the previous day. The market capitalization, which was approaching 10 trillion won at the beginning of the year, also shrank to 7.6 trillion won. This month, Hive has been on a downward trend, showing an upward trend for only two trading days. It seems that ‘big players’ foreign investors and institutional investors are leading the downward trend. This month, foreigners net sold 54.1 billion won worth of Hive stocks. Institutions also sold 49.7 billion won worth. Individuals are receiving the stocks, net buying 103.8 billion won. Girl group NewJeans. / Photo = News Hive, which had been weak from November to February, began to rebound in March thanks to expectations for performance. However, following the ‘Adore incident’, investment sentiment froze rapidly. On April 22, news broke that Hive had begun an audit of the management of its subsidiary label, Adore. At that time, Hive plummeted 7.81% in one day, and its market cap evaporated by 750 billion won.
The Adore situation is ongoing. At a press conference held right following the Adore shareholders’ meeting in late May, CEO Min proposed reconciliation to Chairman Bang Si-hyuk. However, Chairman Bang did not show any particular response. Rather, other labels under Hive, such as Belift Lab and Source Music, filed lawsuits once morest CEO Min, and the conflict is not dying down. Belift Lab and Source Music filed lawsuits, believing that CEO Min damaged the reputation of Le Seraphim and Illit. To make matters worse, New Jeans is also embroiled in plagiarism suspicions. On the 17th of last month, the British Wise Music Group delivered a document to Adore, Hive, and the Korea Music Association stating that “Bubble Gum” is violating copyright by using the band Shakatak’s “Easy, Sad, Than Don” without permission. Wise Music also demanded that Bubble Gum stop being used.
Bubble Gum is a track from the double single ‘How Sweet’ released last May. The album was a commercial success, selling over 1 million copies. Adore’s side claims that they did not use Shaka Tak’s song without permission. A company official explained, “The person who raised the issue must send a report proving plagiarism, and Shaka Tak must respond to it.”
Yoo Seong-man, a researcher at Leading Investment & Securities, explained regarding HYBE, “An unexpected negative development occurred at a time when expectations for performance were high due to BTS Jin’s discharge from the military and the comeback of New Jeans.” He continued, “At this point, it is difficult to discuss whether (New Jeans) is plagiarism,” but added, “The controversy might have a negative impact on album purchase demand and investment sentiment.” BTS’ Jin is carrying the torch for the ‘2024 Paris Summer Olympics’ in Paris, France on the 14th (local time). / Photo = News The outlook for the 12th quarter performance is gloomy. According to financial information company AppnGuide, HYBE’s operating profit in the second quarter is estimated at 74.6 billion won. This is an 8.35% decrease from the same period last year. The securities industry also expected net profit to drop 33.05% to 78.6 billion won. This is due to the marketing costs for ‘Become a Star 2’ published by HYBE IM and costs related to Cat’s Eye, which debuted in the second quarter. Hive is scheduled to announce its second quarter results on the 7th of next month.
Lee Hyun-ji, a researcher at Eugene Investment & Securities, said, “Due to poor performance in the first half of the year and the impact of the Adore issue, the increase in Hive’s stock price will be limited for the time being.” Eugene Investment & Securities lowered Hive’s target stock price from 310,000 won to 290,000 won.
However, the situation is expected to improve in the second half of the year. This is because the activities of the main artists have been concentrated. Lee Seon-hwa, a researcher at KB Securities, explained, “HYBE’s performance will show a ‘low first half’ trend,” and “The third quarter is the peak season for tours, and individual activities of all BTS members are also planned within the year.” She continued, “It is also positive that artists from Universal Music (UMG) are scheduled to enter Weverse.” Some analysis has suggested that it is an attractive investment when considering next year. This is because there is abundant momentum next year, such as BTS’s full group activities and the debut of new artists from HYBE Japan and Big Hit Music. BTS member J-Hope will be discharged from the military in October of this year. Following this, RM, V, Jimin, and Jungkook will be discharged in June next year, and Suga is also scheduled to be discharged in the same month.
Researcher Lee Sun-hwa said, “Junior artists such as Enhypen, Seraphim, Newjins, Tuors, and Ailrit are quickly contributing to profits, so we expect improvement in fundamentals next year,” adding, “We expect loss-making subsidiaries to also begin full-scale business, so we believe that the growth momentum is valid.”
Jin Young-gi, Hankyung.com reporter [email protected]
2024.07.20 15:47
Last modified on 2024.07.20 16:19
Hive investment sentiment weakens due to ‘Adore Incident’ and plagiarism suspicions
Second quarter performance is also expected to be poor“Performance will improve as artist activities begin in earnest in the second half of the year”
“Looking forward to BTS’ full group activities next year”… All members to be discharged in June next year
Hive Faces Slump Amid ‘Adore Incident’ and Plagiarism Controversy
Investment sentiment weakens as BTS’s Jin returns from military service.
Hive Corporation, the entertainment powerhouse behind global pop sensation BTS, is struggling to escape a slump characterized by declining investment sentiment and concerns surrounding its subsidiary label, Adore. Despite the return of BTS member Jin from military service, the ‘Adore incident’ and a plagiarism controversy swirling around NewJeans have cast a shadow over the company’s prospects. Furthermore, its gaming subsidiary, Hive IM, has yet to achieve significant results, adding to the challenges.
Adore Incident and Plagiarism Controversy Weigh on Hive
The ‘Adore incident’ began in April 2023 when Hive initiated an audit of its subsidiary label, Adore, following allegations of mismanagement. The situation escalated in late May when Adore CEO Min Hee-jin proposed reconciliation with Hive Chairman Bang Si-hyuk at a shareholders’ meeting, but the proposal was met with silence. Adding to the turmoil, other Hive labels, including Belift Lab and Source Music, filed lawsuits once morest CEO Min, claiming she damaged the reputation of Le Seraphim and Illit.
Further complicating matters, NewJeans, a group under Adore, has become embroiled in a plagiarism controversy. Wise Music Group, a British music publishing company, accused Adore of copyright infringement by using Shakatak’s “Easy, Sad, Than Don” without permission in their song “Bubble Gum.” The company demanded the song be removed from circulation.
Adore has denied the allegations, claiming they did not use Shaka Tak’s song without authorization and that the issue needs to be investigated thoroughly by the Korea Music Association.
Hive’s Stock Price Plummets Amidst Challenges
Hive’s stock price has taken a significant hit during the first half of 2024. It reached a 52-week low on June 19th, plummeting by nearly 40% from its peak last year. The market capitalization, which was nearing 10 trillion won at the beginning of the year, has shrunk to 7.6 trillion won. Foreign and institutional investors have been net sellers of Hive stock this month, contributing to the downward trend.
Second Quarter Performance Expected to be Poor
Financial analysts are predicting a gloomy second quarter with an estimated operating profit of 74.6 billion won, an 8.35% decrease from the same period in 2023. Net profit is projected to drop by 33.05% to 78.6 billion won. This decline is attributed to marketing costs for ‘Become a Star 2’ and expenses related to the debut of Cat’s Eye in the second quarter.
Hopes for Improvement in the Second Half of 2024
Despite the current challenges, there is cautious optimism for Hive’s performance in the second half of the year. Analysts anticipate improvement due to the increased activity of its main artists, particularly BTS. BTS members are scheduled to have solo activities and the band is expected to resume full group activities next year. The company is also optimistic regarding the potential contributions of artists from Universal Music, scheduled to join the Weverse platform.
Focus Shifts to 2025 with BTS Full Group Comeback
Looking ahead to 2025, the prospect of BTS’s full group comeback following all members complete their military service promises to be a major boost for Hive. The release of new artists from HYBE Japan and Big Hit Music adds further momentum to the company’s growth potential.
Hive’s Future Hinges on BTS and New Artist Development
Ultimately, Hive’s success in navigating its current challenges rests on the continued popularity of BTS, the successful development of new artists, and the ability to mitigate the fallout from the Adore incident and plagiarism controversy.
The company is hoping that its robust artist lineup and strong global fan base will help overcome these challenges, paving the way for a brighter future.
