BTS Won’t Stay Forever Young. The K-Pop Sensation’s Owner Needs New Big Hits. – The Wall Street Journal
BTS Won’t Stay Forever Young. The K-Pop Sensation’s Owner Needs New Big Hits. The Wall Street Journal
BTS performing in Los Angeles last December.
Photo: Rich Fury/Getty Images
Korean pop music, or K-pop, has taken the world by storm. It is shaking up the financial markets, too.
The initial public offering of Big Hit Entertainment, which manages the popular K-pop boy band BTS, has been massively oversubscribed by both institutional and retail investors. The company, which will start trading this Thursday, is valued at around $4 billion after raising $840 million from the IPO, the largest in the country since 2017, according to Dealogic. A first-day pop is likely since individual investors, which make up most of the market’s volume, will likely chase this well-known name, and professional investors will also have to buy since the stock will probably enter major indexes.
BTS, whose name stands for “bulletproof boy scouts” in Korean, has been one of South Korea’s most successful musical exports. It was the first K-pop name to top a U.S. album chart, with the latest being “Map of the Soul: 7” released in February. The seven-member band has been all over social media, having spent a record 199 weeks at No. 1 on Billboard’s Social 50 chart, a measure of popularity on social networks like Instagram and Twitter. Its “Dynamite” music video has already racked up nearly half a billion views on YouTube since launching in August.
One risk is that Big Hit itself ends up being a one-hit wonder: BTS contributed nearly all of its revenue last year. The company has been trying to diversify—it acquired a stake in rival Pledis Entertainment in May—but BTS still made up 88% of Big Hit’s revenue in the first half this year. As popular as BTS is, investors have to place their faith in the company finding the next money-spinner. Scandals in the K-pop industry sank stars last year. And the company also risks being swept up in geopolitical conflicts. Chinese state tabloid Global Times ran an article Sunday criticizing a remark by BTS about the Korean War.
At the IPO price, Big Hit is valued at 51 times this year’s expected earnings, according to S&P Global Market Intelligence. The high notes could still keep coming for a while. But the company needs to find the next act before the music stops.
Write to Jacky Wong at JACKY.WONG@wsj.com
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Appeared in the October 13, 2020, print edition as ‘K-Pop Sensation’s Owner Needs New Hits To Make Its Stock Sing.’