With the Comeback of Top Stars, YG and HYBE Both Hit Record Highs... "High Tariffs Don't Matter"

Full-Group Comebacks of BTS and Blackpink Imminent
Service-Oriented Revenue Model Limits Tariff Impact

Domestic entertainment stocks are stirring. With the return of major artists anticipated this year, there is a growing expectation that the 'K-pop business indicators' of the four major entertainment companies will rapidly improve. In particular, the entertainment industry is benefiting from being free of the U.S.-originated tariff risks that have recently shaken domestic and international stock markets.

The most prominent strength is shown by HYBE and YG Entertainment. After hitting their lowest points in September last year, these two companies have steadily climbed, and on the 6th, they both set new 52-week highs, demonstrating their resilience. Since the beginning of this year, their stocks have risen by 20% and 17%, respectively. Competitors JYP Entertainment and SM Entertainment, as well as the K-pop Exchange Traded Fund (ETF), have also achieved an average return of 15% over the past month.

The driving force behind these companies' stock prices is the comeback news of their flagship stars who sustain the companies. In HYBE's case, all BTS members will have completed their military service by June this year. Although the exact timing of BTS's return to activities has not been confirmed, experts view the performance improvement following their comeback as almost certain. Hyundai Motor Securities stated, "BTS's comeback will not only benefit HYBE but will also expand traffic across the entire entertainment industry," projecting that HYBE's year-over-year revenue and operating profit growth rates will increase by 43% and 81%, respectively, due to BTS's full-group comeback in 2025.

YG Entertainment is also preparing for BLACKPINK's full-group return. A large-scale world tour is scheduled from the second half of this year through next year, with expected attendance surpassing the 2 million recorded in their previous world tour. Additionally, JYP Entertainment's rookie boy group Kickflip debuted last month, and SM Entertainment will introduce the rookie girl group Hats2Hats on the 24th, showing that competitors also have rookie momentum.

With top artists returning, the entertainment industry is expected to show steep growth this year. In particular, the number of concert attendees, a key 'business indicator' of K-pop, is estimated to increase by 29% year-over-year to 17 million, and album sales are expected to rise by 10% to 118 million copies. Hyundai Motor Securities forecasts that the combined operating profit of the four major entertainment companies will surge 86% year-over-year to 684.9 billion KRW in 2025, with HYBE at the center of this growth.

HYBE is also praised for successfully filling the BTS hiatus by expanding the presence of its artists in Japan. Lee Hwajeong, a researcher at NH Investment & Securities, explained, "Seventeen, TXT, and Enhypen each placed four albums in the top 10 of the 2024 Oricon album chart," and added that additional benefits could be expected from the recent strengthening of the Japanese yen. On this day, in the Tokyo foreign exchange market, the yen surged to its highest level since December last year following hawkish remarks from a Bank of Japan (BOJ) official suggesting that the benchmark interest rate should be raised to 1% by March next year.

Another positive factor is that the entertainment industry is free from the tariff risks posed by U.S. President Donald Trump, which have recently unsettled the domestic stock market. Since K-pop's main revenue sources?digital music, concerts, and appearance fees?are services rather than goods, imposing tariffs is difficult. Andoyoung Ahn, a researcher at Korea Investment & Securities, noted, "Although albums are classified as goods, most of the demand comes from domestic and Asian fandoms," adding, "Even if a 10% general tariff is applied, the success or failure of individual content will have a much greater impact than price fluctuations."