Many haters are mistakenly thinking that the era of HYBE and BTS is coming to an end when announcing their enlistment. However, looking at the growth in the share price of HYBE in the recent trading session and through the analysis of industry experts, it is clear that "King is still king".
Here's an analysis of why HYBE's stock didn't drop but rose after Jin's enlistment announcement:
Specifically, yesterday afternoon, after the news that Jin confirmed that he would start enlistment procedures after completing his solo album promotion, the CEO of HYBE sent to all HYBE shareholders and investors a letter outlining future options when BTS enlists in the army to ensure profits.
In this letter, the CEO of HYBE points out that the enlistment of BTS members has been arranged in the most perfect way to ensure individual activities as well as promise a reunion in 2025. In addition, HYBE also launched new business plans such as debuting at least 4 more new groups, promoting groups under labels or other business activities to fill the gap of BTS.
The company's shareholders see BTS's military service plan as the best way to 'resolve uncertainty'. This uncertainty persisted as the Ministry of Defense failed to make a final decision on whether or not BTS would enlist and HYBE did not make an announcement about the members' future directions. Therefore, when making a decision, it creates a stable psychology for investors.
The stock price of both HYBE rose nearly 5% on the first trading day after revealing BTS members' sequential enlistment plans. HYBE closed at 12,500 KRW on the stock market the same day, up 4.78% (5,500 won) from the previous trading day's closing price (115,000 KRW). At one point in the day, it spiked to 7.8%.
Choi Min-ha, a researcher at Samsung Securities, said of this in an analysis: “Once the uncertainty that caused stock price volatility has been resolved, the execution of HYBE's strategy will play an important role in the stock price.” It means that when questions related to uncertainty were answered, stock prices recovered positively and the next steps of HYBE is completing what they promise to the investors.
Many economists also say that while profit declines over the next two years due to BTS's absence are inevitable, they believe that HYBE has a higher valuation than its peers.
This is dictated by 2 reasons: BTS's ability to continues their activities in the future is huge and platform business growth is expected to be driven by expanded monetization on the Weverse platform in 2023. In addition, two boy groups Seventeen, TXT are capable of leading world-class tours, and two girl groups (NewJeans, Le Sserafim) are reaping significant profits. Meanwhile, 4 new groups that are about to debut promise a bright future.
In general, it only took 2 years for BTS to wait while some members were still able to maintain solo activities in the gap, so many investors still believe in BTS's stability after their comeback. HYBE seems to have a perfect reversal after this event!
