Big Hit Entertainment, the management label of popular K-Pop group, BTS, hold an initial public offering (IPO) on October 5th and 6th . The company set the IPO price at 135,000 won. Yet, there is a risk when you want to buy Big Hit stock based on CNBC.
The risk of buying BTS agency shares
Before buying Big Hit Entertainment shares, you should know what this company owns. The South Korean daily, Jppngan Ilbo, as saying by Yonhap, Big Hit Entertainment rely on BTS very much. Big Hit’s revenue of 97.4% comes from BTS.
In order to diversify, Big Hit has acquired two smaller agencies, Pledis Entertainment and Source Music. In the first half of 2020 Big Hit’s dependence on BTS fell by 10 percentage points. But that still makes Big Hit rely on BTS, which is 87.7% of the revenue.
There is also a big question on the boy band’s future in the near future. The reason is, there is a military obligation for 18 months for South Korean men. That obligation will impact the band in late 2021.
According to the South Korean daily Joongang Ilbo, Big Hit’s projected assessment is way beyond the combined assessment of “Big 3” Korean entertainment company. It is about KRW 3.2 trillion. SM Entertainment, YG Entertainment and YYP Entertainment have a long history of consistently marketing various acts.
In this corporate action, Big Hit was able to raise fresh funds of KRW 962 billion.
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