[비즈한국] “Now is a truly great time. If I had spare money, I would absolutely buy our company’s (JYP Entertainment) stock. I believe in the three-year and five-year outlook.”
This is what Park Jin-young, Chief Creative Officer (CCO) of JYP, said while appearing on the YouTube channel ‘Money Comics’ in November 2023. At the time, JYP’s stock price was in the 90,000 KRW range. The current stock price is hovering in the low-to-mid 40,000 KRW range. If you had bought JYP stock immediately after hearing Park’s comments, you would have suffered a loss of approximately 50%.
CCO Park stated that he was looking at the stock not for the immediate future, but for three to five years down the line. In three months, it will have been three years since Park made those remarks. While it is not impossible for JYP’s stock price to surge in the remaining three months, financial experts assess that a significant rebound is realistically unlikely.
No artists to replace TWICE or Stray Kids
JYP is considered passive in its investments compared to other entertainment companies. HYBE has been aggressive, such as acquiring U.S.-based Ithaca Holdings for approximately 1.5 trillion KRW in 2021. YG Entertainment is also actively engaged in various investments through its affiliate YG Investment and handles the operational agency for Naver’s music platform ‘VIBE.’ SM Entertainment also began restructuring its business after being acquired by Kakao. Of course, not all of these investments have been successful.
JYP is a company that values its internal culture. It is said that its reluctance toward mergers and acquisitions (M&A) reflects this culture-first atmosphere. The company reportedly refrains from M&A to preserve its unique JYP identity. CCO Park has also made similar remarks on YouTube.
JYP has maintained solid performance until recently, with TWICE and Stray Kids cited as their flagship artists. The problem is that if these key artists underperform, there are no suitable revenue sources to replace them. While other entertainment agencies are at least increasing revenue streams through investments, JYP has made relatively few such attempts.
JYP has notable newer artists such as NiziU, ITZY, KickFlip, NMIXX, and Xdinary Heroes. However, it is difficult to consider them at a level that could replace TWICE or Stray Kids. The reason financial markets are concerned about JYP is the uncertainty surrounding the growth potential of these junior artists.
Park Jun-hyung, an analyst at SK Securities, analyzed, “A total of five new albums were released (by JYP), primarily from junior artists, but sales per album did not reach 500,000 copies,” adding, “Regarding performances, while the TWICE world tour and 2PM Tokyo Dome concert are reflected, a year-on-year decline in performance revenue is inevitable due to the high base effect from Stray Kids’ North and South American tours last year.”
Choi Min-ha, an analyst at Samsung Securities, explained, “As (JYP’s) sales per album remain at or below 500,000 copies, the impact on profitability improvement is expected to be limited when considering production costs per album,” and added, “There is a need for proof regarding the speed of growth and monetization of junior artists.”
Rumors of TWICE failing to renew, Stray Kids nearing military service
Ultimately, until JYP’s junior artists grow, existing flagship artists must carry the responsibility for revenue. However, rumors have recently been circulating that TWICE will not renew their contracts with JYP. If their core artist, TWICE, departs, it is expected to have a negative impact on JYP’s performance.
For JYP, TWICE is a special group. TWICE officially debuted in October 2015, and JYP’s revenue increased significantly after their debut. Looking at JYP’s past revenue: 15.1 billion KRW in 2012, 21.3 billion KRW in 2013, 48.5 billion KRW in 2014, 50.6 billion KRW in 2015, 73.6 billion KRW in 2016, 102.2 billion KRW in 2017, 124.8 billion KRW in 2018, and 155.4 billion KRW in 2019.
JYP has another flagship artist in Stray Kids. However, considering that the members of Stray Kids are between 25 and 29 years old, they will soon face military service issues. Even if all members enlist around the same time, a hiatus of about two years is unavoidable.
The exact contract periods for TWICE are not publicly known. Recently, rumors of TWICE members moving agencies have been surfacing one after another in the entertainment industry. Specific rumors are circulating that member Jihyo is preparing to establish a one-person agency, and Chaeyoung has held meetings with other agencies.
As a publicly traded company, JYP cannot ignore its performance or shareholders. However, there are no significant signs of a stock price rebound in the current atmosphere. On top of this, if TWICE leaves JYP, it is expected to exert additional negative pressure on both financial performance and stock price. A JYP representative stated, “TWICE is currently in the period of discussing contract renewals,” and added, “We will inform you as soon as matters are finalized.”