HYBE’s Stock Plummets as Management Takeover Scandal Unfolds

Min Hee Jin, the CEO of ADOR and known as the mother of the popular girl group NewJeans, has caused a stir in the entertainment industry as evidence of her trying to seize control of HYBE without the consent of the majority shareholder has emerged.

According to industry sources on the 22nd, HYBE recently sent audit inquiry letters to Min Hee Jin, the CEO of ADOR, and deputy representatives.

The inquiry letter reportedly contains evidence that the ADOR management team attempted to seize control, suspicions of external consulting, and allegations of irregularities in personnel recruitment.

The ADOR management team planned to sell the 80% stake in ADOR, owned by HYBE, to investors friendly to the current ADOR management team, exacerbating public opinion based on HYBE’s unfair demands on ADOR.

Following the news, HYBE’s stock price plummeted.

The stock price of HYBE ended the day at 212,500 won ($179), down 7.81% from the previous day. At one point, it fell by more than 10%.

The market cap also significantly shrunk, with the stock price falling over 7%. The market cap, which was 9.6 trillion won ($8.1 billion) based on the closing price on the 19th, decreased to 8.85 trillion won ($7.5 billion). The evaporated market cap amounts to 750 billion won ($632 million).

In disbelief over the situation, investors reacted with self-deprecating humor as the market cap fell, saying, “It’s like YG Entertainment’s market cap just disappeared.”

Indeed, YG Entertainment’s market cap was 818.7 billion won ($689 million) on the day.

NewJeans is also known for boosting HYBE’s stock price right after its debut.

In June 2022, before NewJeans’ debut, the announcement of BTS’s hiatus led to a 27.98% drop in HYBE’s stock price to 139,000 won ($117), recording a 52-week low immediately after the market opened.

Shortly after, when NewJeans’ first music video was released, HYBE’s stock price ended the day higher.

According to the Korea Exchange, HYBE’s stock price ended at 167,000 won ($141), up 6.37% from the previous trading day. The next day, it jumped another 5.69%, rising over 12% in just two days. On the 22nd, less than a month after NewJeans’ debut, it ended trading at 184,000 won ($155).

The securities market also evaluated HYBE as a stock with ” high investment appeal, considering the growth potential of NewJeans.”

In this situation, comments made by CEO Min Hee Jin in an interview with a media outlet last January are being highlighted.

CEO Min said, “People easily shout HYBE capital, but I don’t agree with this expression,” adding, “The detailed label management strategy after the investment amount was decided and the investment was made has nothing to do with HYBE. It’s also up to the independent discretion of the label, and at that time, I had received investment proposals of similar size from other than HYBE.”

She continued, “At that time, I had various options, and no matter where the investment was, creative independence and non-interference would have been the top priority, so there was no particular reason it had to be HYBE.”

Recent reports suggest that HYBE is anticipated to be classified as a conglomerate group for the first time in the entertainment industry.

According to the Financial Supervisory Service’s electronic disclosure system on the 8th, HYBE’s asset size as of the previous year’s third quarter stands at 5.52 trillion won ($4.65 billion). This encompasses 16 affiliates, including Weverse Company, Big Hit Music, and Pledis Entertainment.

The Fair Trade Commission designates conglomerate groups and their respective heads yearly based on a total asset amount of over 5 trillion won ($4.2 billion). Therefore, this year, HYBE is expected to be included in the conglomerate group.

However, the Fair Trade Commission issued a subsequent clarification the following day, affirming, “No decision has been made yet regarding the designation of conglomerate groups subject to disclosure, including HYBE.”