Hybe shares plunge 16% as BTS tour revenue misses profit margin expectations

Despite record-breaking revenue and operating profit in its second quarter results — driven largely by BTS — shares of South Korean K-pop agency Hybe erased gains and suffered a dramatic sell-off.

Key Facts

• Shares of Hybe plunged 16.09% on Tuesday, marking the company's worst trading day since June 2022.
• Losses extended further on Wednesday, with shares tumbling as much as 16.31% to their lowest level since September 2024.
• Approximately 2.845 trillion won ($1.96 billion) was wiped from Hybe's market capitalization in less than 24 hours.

Why the Market Reacted

Analysts attributed the sharp decline to a miss in profit-margin expectations, despite revenue and operating profit reaching all-time highs.

• Concert revenue was the primary driver of the record results, spiking 243.3% year on year and 630% compared to the previous quarter — largely fueled by BTS' Arirang tour, which began on April 9 in South Korea.
• However, analysts noted that concert revenue is lower margin, as a significant portion is paid out to artists rather than retained by the company.
• Hybe's operating margin for Q2 stood at 11.8%, below SK Securities' expectation of 12.7% and Eugene Securities' forecast of 12.2%.

Analyst Commentary

In a July 29 note, SK Securities analyst Park Jun-hyung said the higher proportion of tour revenue led to increased artist-settlement costs, causing profitability to fall short of expectations.

Hwang Ji-won of IM Securities echoed this view, describing mature-artist concert revenue — such as that from BTS — as relatively low-margin, adding that the higher concert mix intensified cost pressure.

Lim Soo-jin of Kiwoom Securities noted that the market had expected revenue growth to be led by merchandise sales, which carry higher profit margins — reportedly up to 50%, according to analysts who previously spoke to CNBC.

Outlook for the Second Half of 2026

Hybe stated in its earnings release that more than 200 additional concerts from all its artists are expected in the second half of 2026, on top of the 119 concerts held in the first half. This would represent the company's busiest concert schedule since 2021.

'Incomprehensible' — But Analysts Remain Positive

Despite the sell-off, all five brokerages reviewed by CNBC maintained a positive outlook on Hybe.

• Kiwoom's Lim said additional merchandise production in the second half, along with expanded tours from new groups Cortis and Katseye, are likely to support future earnings.
• IM Securities pointed to promising growth from rookie groups and the return of girl group NewJeans as potential catalysts.

NewJeans, once one of Hybe's most successful rookie groups, had been embroiled in a long-running contract dispute with Hybe starting in 2024. In December, a South Korean court ruled that NewJeans' contract with Hybe subsidiary ADOR remains valid, binding the group to ADOR until 2029.

— CNBC's Jenny Lee contributed to this report.