Big Hit

Should You Buy Big Hit Entertainment Shares?

Big Hit Entertainment, the management agency that runs the world famous kpop band, BTS, recently had its initial public offering on the Korean Stock Exchange and raised over 840 million USD, resulting in a valuation at about 7.6 billion USD. This is incredible, considering they opened at 118 USD per stock and closed at 225 USD. These numbers are amazing and what businesses hope for when they decide to sell shares. That is, knowing others see more value than they do in their own business. 

When I parted from this news, I immediately thought this was great for Big Hit and BTS, but also that this didn’t make much sense. 

Considering the coronavirus hasn’t cleared since its global spread in March, artists have had to halt all in-person tours and concerts. Of course, there are other sources of revenue for bands like BTS which includes releasing albums, taking part in advertisement campaigns, selling merchandise, and so on but a 7.6 billion USD valuation sounds overboard.  

It is also required of Korean able-bodied men to serve in the military for 21 months and that includes BTS members which will stop them from appearing altogether for a while. 

Even the largest of bands like One Direction, inevitably fall apart and BTS debuted in 2013 so the time may not be as far as we’d hope.

Furthermore, it is rare for a band to grow as popular as BTS and from the looks of it, Big Hit’s other bands are not reaching similar global attention.

All of this information does not project well for the company in terms of raising significant sales revenue sustainably in my opinion. I see this as a bad investment choice and would not recommend buying any shares at their current stock prices. Thanks for reading and hope this helps with your investment decisions!

©Parting Stories

References

Hollingsworth, J. and Kwon, J. (2020). BTS label Big Hit soared 90% on its stock market debut. It’s still a risky bet. Retrieved from CNN Business. https://www.cnn.com/2020/10/14/investing/big-hit-bts-ipo-intl-hnk-dst/index.html

BBC (2019). BTS: What will military service mean for their future? Retrieved from BBC News. https://www.bbc.com/news/newsbeat-50515696

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Lea
Lea
3 years ago

Not that I’ll be investing anytime soon, but thanks. Very informative.

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