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Media & Entertainment

Shares of BTS agency Big Hit drop more than 20%

Analysts say lower price is more in line with company fundamentals

BTS shares which fell as low as 200,500 won on Friday, have fallen sharply after doubling from their IPO price earlier in the week.   © Reuters

SEOUL (Reuters) -- Shares in Big Hit Entertainment, the management agency of South Korean K-pop group BTS, fell as much as 22% on Friday, extending losses from its debut the previous day as prices eased after pre-listing hype, analysts said.

Shares in Big Hit, which relies heavily on the boy band for revenue, had dipped from its debut price on Thursday closing, but analysts said the lower price should be viewed as more reasonable, based on fundamentals.

Analysts said the company's valuation based on its initial public offering price of 135,000 won per share was comparable to peers such as K-Pop agencies SM Entertainment and JYP Entertainment, and that its reliance on BTS for revenue caused market concern.

They said the share price, which fell as low as 200,500 won per share on Friday, seemed to be coming down to earth after a recent trend of overheated speculation into new offerings fueled its debut price, which was double the IPO price.

"Big Hit's reliance on BTS is still absolute when including non-management indirect sales such as merchandise, intellectual property and contents," said Kim Hyun-yong, analyst at Hyundai Motor Securities.

"It must make all-out efforts to create a post-BTS revenue source."

The KOSPI benchmark was down 0.9%.

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