Hybe shares fall as BTS concert boom pressures margins

Hybe shares fall sharply this week even after the South Korean entertainment group reported record second-quarter revenue and operating profit, with analysts pointing to weaker-than-expected margins from BTS concert income. CNBC reported that as much as 2.845 trillion won, or $1.96 billion, was erased from Hybe’s market value in less than 24 hours.

The stock dropped 16.09% on Tuesday, its steepest one-day decline since June 2022, according to CNBC. It extended losses on Wednesday, falling as much as 16.31% to its lowest level since September 2024.

Hybe, South Korea’s largest K-pop agency, reported second-quarter revenue of 1.45 trillion won, up 105.5% from a year earlier, according to its earnings release. Operating profit rose 159.3% year on year to 170.9 billion won, while net profit increased 610.1% to 109.8 billion won.

Why did Hybe shares fall after BTS concerts?

Analysts said the share move reflected disappointment with profitability rather than top-line growth. Hybe’s operating margin was 11.8% in the quarter, below SK Securities’ expectation of 12.7% and Eugene Securities’ estimate of 12.2%, according to CNBC.

Concerts were the main driver of the quarter’s sales growth. Hybe said concert revenue rose 243.3% from a year earlier and 630% from the previous quarter, supported largely by BTS’ Arirang tour, which began in South Korea on April 9.

Concert revenue can lift sales quickly because ticket income is booked at scale during a tour period. Analysts cited by CNBC said it generally carries lower margins for the agency because a larger share of the revenue is paid to artists and associated costs than in some other business lines.

SK Securities analyst Park Jun-hyung wrote in a July 29 note that a higher share of tour revenue increased artist-settlement costs, weighing on profitability relative to expectations. IM Securities analyst Hwang Ji-won also described concert revenue from established artists such as BTS as comparatively low-margin and said the greater concert mix added cost pressure.

Kiwoom Securities analyst Lim Soo-jin said the market had expected a larger contribution from merchandise, a higher-margin business. CNBC cited analysts who previously said merchandise margins can reach 50%.

What Hybe expects for the rest of 2026

Hybe said it expects more than 200 concerts from its artists in the second half of 2026, following 119 concerts in the first half. The company said that combined figure would be its highest concert count since 2021.

CNBC said all five brokerages it reviewed maintained a positive view on Hybe. Lim at Kiwoom pointed to additional merchandise production in the second half and tour expansion from newer groups Cortis and Katseye as possible support for future earnings.

IM Securities also cited growth from rookie groups and the return of girl group NewJeans as factors that could help Hybe’s earnings. NewJeans had been in a contract dispute involving Hybe subsidiary ADOR from 2024, and CNBC reported that a South Korean court ruled in December that the group’s contract with ADOR remains valid through 2029.

This story draws on original reporting from CNBC.