HYBE’s stock price experienced a notable decline following a controversy involving its subsidiary, Belift Lab, and a video addressing plagiarism allegations. On June 10, Belift Lab released a video titled ‘Belift Lab’s Position on Plagiarism Claims’ on its YouTube channel. The video aimed to refute accusations of plagiarism between the groups ILLIT and NewJeans, raised by Min Hee Jin, CEO of ADOR. However, the video was met with criticism from both industry insiders and netizens, who found the rebuttal unconvincing and forced.
The day after the video was posted, HYBE’s stock closed at 198,000 KRW (144.41 USD) per share, marking a 2.22% drop from the previous trading day. This decline continued despite the discharge of BTS member Jin from his military service on June 12, which was expected to positively impact the stock price. Many attributed the ongoing decline to the backlash from the Belift Lab video.
In addition to the video, Belift Lab announced on their official social media accounts that they would pursue legal action against Min Hee Jin and those who made malicious comments regarding the plagiarism allegations. This move was perceived negatively by some analysts, who saw it as a hostile response to Min Hee Jin’s earlier offer of reconciliation to HYBE during a press conference. This perception further contributed to the decline in HYBE’s stock price.
The controversy has also sparked a broader dispute between HYBE and ADOR, the subsidiary label responsible for launching the successful girl group NewJeans. On June 13, HYBE’s stock price closed at 210,000 KRW (152.39 USD), down 7.81% from the previous session, significantly reducing the company’s market capitalization from 9.6 trillion KRW to 8.8 trillion KRW. The sharp decline was partly due to news of an audit launched against ADOR’s management, including CEO Min Hee Jin.
HYBE accused Min Hee Jin of attempting to spin off ADOR from the parent company, sending a formal inquiry letter with a deadline. Currently, HYBE owns 80% of ADOR, with Min holding 18% and the rest of the management team holding 2%. Min, on the other hand, claimed that the core issue began with Belift Lab copying NewJeans when creating the new girl group ILLIT.
Despite the ongoing dispute, securities analysts predict that the impact on HYBE’s earnings will be minimal. Retail investors saw the decline in stock price as an opportunity for bargain hunting, purchasing shares that institutional and foreign investors had sold off. Lee Hwa-jeong, an analyst at NH Investment & Securities, noted that ADOR’s contribution to HYBE’s earnings was 11% last year and is estimated to be 14% this year. However, this ratio is expected to decrease as all members of BTS resume their activities.
Furthermore, the dispute is not anticipated to affect NewJeans’ future performances. Ahn Do-young, a researcher at Korea Investment & Securities, stated that NewJeans is under an exclusive contract with ADOR, and since HYBE owns 80% of ADOR’s shares, NewJeans remains within HYBE’s intellectual property. Both HYBE and ADOR are unlikely to damage NewJeans’ IP, so their musical activities are expected to proceed as planned.
Securities firms that issued reports on HYBE maintained a “buy” investment rating along with their existing target prices of around 310,000 KRW. However, Oh Ji-woo, an analyst at eBest Investment & Securities, noted that the short-term price of HYBE’s shares would inevitably display volatility due to the audit of ADOR.
Despite concerns that the dispute would dampen the growth momentum of entertainment stocks, the impact is considered limited. Lee Jae-won, an analyst at Shinhan Securities, observed that entertainment stocks have continued to strengthen for the second consecutive trading day, driven by the perception that prices have bottomed out and rising expectations for comebacks by leading groups.
Notably, shares of another K-pop powerhouse, SM Entertainment, saw a strong upward trend, fueled by the successful debut of RIIZE and NCT WISH. The stock closed at 86,400 KRW, up 5.88% compared to the previous session.
