HYBE, K-Pop Stocks Suffer Some of the Worst Declines in Brutal Week for Global Markets

Music stocks were off sharply this week as global markets were roiled by worries about the health of the U.S. economy and Friday’s disappointing jobs report.  

K-pop stocks suffered big declines this week as a major Korean stock market index had its biggest one-day decline ever. South Korea’s KOSPI composite index fell 8.8% on Monday as investors were gripped with fear about a U.S. recession. The market improved the following day, but the KOSPI ended the week down 4.9% to 2,544.81.

South Korean music companies were unfortunate casualties during the week of upheaval. The four main K-pop companies fell an average of 10.8% and their average year-to-date loss increased to 40.9%. HYBE fell 10.2% to 165,000 won ($123.25), bringing its year-to-date loss to 29.1%. YG Entertainment slipped 9.8% to 30,800 won ($23.01). SM Entertainment fell 10.4% to 56,300 won ($42.05). JYP Entertainment fared the worst, dipping 13.0% to 44,450 ($33.20) and bringing its year-to-date loss to 56.1%. 

The Billboard Global Music Index fell 4.8% to 1,744.64, reducing the year-to-date gain to 13.7% and marking the index’s worst week since it fell 5.1% in the week ended Feb. 24, 2023. The broader stock market had a miserable week. In the United States, the Nasdaq composite fell 5.8% and the S&P 500 slipped 4.2%. In the United Kingdom, the FTSE 100 lost 2.3%. China’s Shanghai Composite Index fell 2.7%.

Just three of the BGMI’s 20 stocks finished the week in positive territory, and two of the three winners are among the index’s smallest contributors. The top stock, Believe, which gained 3.7% to 15.06 euros ($16.69), has a float of less than 4% after a consortium led by CEO Denis Ladegaillerie acquired nearly the entire share capital. 

The second-best performer, Anghami, has the smallest market capitalization of all index companies at $23 million. The Abu Dhabi-based music streamer gained 2.3% to $0.90 after announcing Thursday (Sept. 5) that its video streaming subscriptions increased 18% since the majority investment by OSN Group, owner of MENA-based video-on-demand streaming platform OSN+, in April.  

Live Nation fell 5.0% to $92.81 despite two positive analyst opinions this week. BofA Securities initiated coverage of Live Nation this week with a $125 price target and a “buy” rating. Oppenheimer, which dropped its Live Nation price target from $120 to $110 in May, raised it back to $120 on Friday. 

Sphere Entertainment Co. dropped 7.1% to $43.27 after Benchmark downgraded Sphere shares to “sell” with a $40 price target, well below the prior day’s $46.60 closing price. Benchmark analyst cited concerns about “scalability, high production costs, and a potentially underwhelming profitability outlook” for the $2.3 billion Las Vegas venue. 

The week’s largest decline came from SiriusXM, which fell 17.0% to $2.73. On Wednesday (Sept. 4), SiriusXM and Liberty Media announced the final exchange ratio for the pending merger of SiriusXM’s and Liberty Media’s tracking stock, Liberty SiriusXM Holdings. On Monday (Sept. 9), Liberty Media will redeem each outstanding share of Liberty SiriusXM common stock for 0.8375 shares of the new SiriusXM stock. SiriusXM shareholders will receive 0.1 shares of the new SiriusXM stock, which will trade under the same SIRI ticker as the current SiriusXM stock. Following the merger, former holders of Liberty SiriusXM stock will own roughly 81% of the new shares.

The BGMI’s most valuable component, Spotify, fell 5.9% to $322.75. Another major stock on the index, Universal Music Group (UMG), dropped 3.0% to 22.93 euros ($25.42). UMG will host investors and analysts at its Capital Markets Day on Tuesday (Sept. 10).