The Cause of Big Hit's Stock Price Drop Is the Massive Sell-Off by the Four Major Shareholders

Mainstone, the 4th Largest Shareholder, and Related Parties Realize Gains Immediately After Listing
Net Selling Exceeds 360 Billion KRW for 4 Consecutive Trading Days
Concerns Over Further Stock Price Decline and Market Distrust Due to Major Shareholder's Selling Pressure

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] It has been revealed that Mainstone, the fourth largest shareholder of Big Hit Entertainment (hereinafter Big Hit), sold off stocks worth approximately 360 billion KRW shortly after the listing. As major shareholders cashed out seeking capital gains in the early stages of the listing, distrust toward Big Hit and the public offering market is deepening.

According to the Financial Supervisory Service's electronic disclosure system on the 22nd, Mainstone, Big Hit's fourth largest shareholder, disclosed that it sold 1,200,769 shares of Big Hit on the market from the 15th to the 20th. The average selling price per share was 229,770 KRW. Over four trading days starting from the first day of listing, they sold stocks worth 275.9 billion KRW. As a result, Mainstone's stake decreased from 7% to 3.6%.

'Eastone No.1 Private Equity Investment Partnership,' which was not listed among Big Hit's major shareholders, also revealed through disclosure on the same day that it is a special related party of Mainstone and sold 381,112 shares out of the 780,176 Big Hit shares it held. The average selling price was 232,296 KRW, earning approximately 88.5 billion KRW. The total Big Hit shares sold by these entities reached 1.59 million shares. This amounts to about 4.4% of the total issued shares being consecutively sold right after the listing. Until now, the selling pressure from other corporations was pointed out as a cause of the stock price decline, and this disclosure confirms it as fact.

The stock price of Big Hit, known as the agency of the idol group BTS and considered the biggest IPO this year, has been declining continuously since the listing. Big Hit recorded a 'ttasang' (a term referring to the stock price doubling from the public offering price on the first day and hitting the upper limit) on the first day but has fallen for five consecutive trading days. On the previous day, it closed at 179,000 KRW, down 1.92% from the previous trading day. This is about half of the 'ttasang' price of 351,000 KRW on the first day of listing.

As the largest shareholder began realizing gains immediately after the listing, anxiety is spreading among investors. There are concerns about losses among individual investors who jumped into the public offering frenzy. Individual investors have net purchased stocks worth 455.8 billion KRW up to the previous day. Considering the average purchase price of individuals during this period was 243,666 KRW, they have already incurred losses of about 27%. Currently, 1,527,000 shares under Big Hit's lock-up agreement are expected to be released in large quantities within a month, which could lead to further price declines. It is anticipated that controversies over the appropriateness of Big Hit's stock price and distrust in the public offering market will increase going forward.