K-pop is doing amazing charts and sales and selling out big venues around the world, but the South Korean companies behind these artists are off to a terrible start in 2024.
As of Friday (February 2), four K-pop stocks — HYBE, SM Entertainment, JYP Entertainment and YG Entertainment — have fallen an average of 17% year-to-date. HYBE, the home of BTS and its members' various solo projects, performed best with a 12% drop, while JYP Entertainment is the worst of the group with a 24.1% loss. Elsewhere, YG Entertainment has lost 14.7% and SM Entertainment is down 17.4%. Korean stocks in general got off to a much better start: Through February 2, the KOSPI composite index of Korean companies was up 5.5%.
Investors may feel that K-pop's finances are less than reliable after news broke this week that Kakao Corp. controls the financial practices of SM Entertainment after acquiring a 40% equity stake in 2023, according to reports from South Korea. Kakao's audio committee is investigating “the appropriateness of investment decisions made by SM management without prior consultation with Kakao,” a Kakao official said The Korea Times. At present, Kakao only audits SM Entertainment's books, not reviewing its management or considering selling its shares. Amid intense media coverage in Korea, Kakao went so far as to issue a statement on Monday (January 29) to dispel rumors that it will sell its stake in SM.
Spotify, on the other hand, is soaring ahead of its fourth-quarter earnings report on Tuesday (February 6). The music streaming giant gained 3.8% to $222.31 this week, bringing its year-to-date gain to 18.4%. Spotify shares rose 1.6% on Friday after news that the company had signed a new distribution deal with popular podcaster Joe Rogan. Spotify will sell and distribute advertising The Joe Rogan Experience across multiple platforms across multiple podcasts, according to Wall Street Journal. So, unlike the previous deal, Rogan's show will not be exclusive to Spotify and will be available on YouTube and elsewhere.
Although Rogan is no longer exclusive to Spotify, the deal could be extremely lucrative. A minimum upfront guarantee and a share of ad revenue could be worth as much as $250 million, according to the report. While Rogan has proven perennially popular, Spotify has maintained its relationship with the comedian while distancing itself from its previous strategy of high-priced exclusive content offerings. She called her dad No longer exclusive to Spotify, Barack and Michelle Obama left for Amazon's Audible, and former royals Prince Harry and Meghan Markle did not renew.
But investors' enthusiasm for Spotify hasn't spilled over to other music streaming companies. Abu Dhabi-based music show Anghami fell 10.1% to $0.98 this week, taking its year-to-date decline to 5.8%. Three other music streaming companies also posted losses: France's Deezer fell 2.3%, America's LiveOne sank 5.3% and China's Cloud Music fell 6.2%. Tencent Music Entertainment, China's biggest music streaming company, rose 0.4 percent.
The Billboard Global Music Index fell 0.4% to 1,588.68 shares this week as 13 of 20 stocks posted losses and only seven stocks finished the week in positive territory. Stocks rose broadly in the United States: the Nasdaq composite gained 1.1% to 15,628.95 and the S&P 500 improved 1.4% to 4,958.61. In the UK, the FTSE 100 fell 0.3%. South Korea's KOSPI composite rose 5.5 percent. China's Shanghai Composite fell 6.1% to 2,730.15 points.
German concert promoter CTS Eventim was the biggest gainer this week up 4.1%. Two other live entertainment companies, Sphere Entertainment Co. and MSG Entertainment, ended the week up 2.8% and 0.7%, respectively.
Among the week's biggest losers was the Hipgnosis Songs Fund, which fell 7.5% to £0.653 a share. Hipgnosis fell 2.5% on Friday after the news broke Merck Mercuriadis is stepping down as CEO of the fund's investment adviser, Hipgnosis Song Management, to become chairman. President/COO Ben Katowsky will assume the role of CEO.
