K-pop stocks poised for growth in the second half of the year, quietly gathering momentum.
The current outlook for major K-pop labels - Hybe, SM Entertainment, YG Entertainment, and JYP Entertainment - is showing signs of cautious optimism, driven by factors such as global market expansion, stable business models, and strong earnings performance.
Key Points on Growth and Recovery
Hybe, known for its global success with BTS, has faced some stock declines due to members' military enlistments and market concerns. However, the company's high spending on long-term scaling and diverse business avenues, such as fandom platforms and global tours, are expected to boost multiple revenue streams and improve return on investment.
SM Entertainment demonstrates moderate growth with operating profit margins of 14–25%. The company, which has undergone leadership changes, remains a steady player with strong operational efficiency and a well-established global presence.
YG Entertainment has had more volatile stock performance, closely tied to the success of acts like BLACKPINK and TREASURE. Its growth is less predictable but tied to the performance and international appeal of its key artists.
JYP Entertainment stands out as the most stable and consistent stock in terms of growth and profitability, with the highest operating profit margin of 24.6%. Its business model is highly efficient, making it a reliable long-term investment in K-pop stocks.
Factors Contributing to Recovery and Anticipated Growth
- Global Expansion and Diversification: The footprint of K-pop has broadened beyond traditional markets to include Europe, the Middle East, and other regions, increasing export opportunities for K-pop-related products and services.
- Vertically Integrated Business Model: Unlike Western labels that focus mainly on artist-led content, K-pop companies control the entire process from talent scouting to production and marketing, creating a self-reinforcing ecosystem that lowers risk in launching new acts and steadily builds global fanbases.
- Strong Live Performance Revenues: Concert tours and related merchandising significantly boost earnings, supporting stock recovery and growth prospects.
- Supportive Macroeconomic Factors: South Korea’s economic outlook has been revised upward to 1% growth in 2025 by major global banks, aided by trade agreements such as the eased US tariff deal, which lowers uncertainty and supports corporate earnings environments.
In summary, while Hybe faces some near-term risks tied to major artist enlistments, its diversified strategies and ongoing tours help recovery; SM and YG have moderate but less consistent growth; and JYP is the most profitable and stable K-pop stock. The vertical integration model, global market expansion, and strong live revenues are key growth drivers for all four companies going forward.
Analysts like Lee Ki-hoon of Hana Securities emphasize large-scale world tours by high-profile IPs and a sharp rise in merchandise sales as key investment drivers in K-pop. The debut of a new boy band under Hybe Latin, along with BTS' world tour next year, is also seen as a growth driver.
Despite temporary setbacks, such as a tax investigation and police raid that caused a 24% drop in Hybe's stock price in July, the labels have shown resilience and are expected to continue their growth trajectory. By the end of July, Hybe's stock rebounded from losses, while SM, YG, and JYP closed at 140,200 won, 93,200 won, and 79,800 won per share, respectively. During the same period, K-pop labels experienced an average decline of 9% in July, while the Kospi and Kosdaq gained 4% and 2.5% respectively.
- The diversified strategies of finance and investment in the music industry, such as global tours and fandom platforms by Hybe, make it a potential boon for multiple revenue streams and a good investment opportunity in the entertainment sector.
- Analysts suggest that the growth of K-pop labels, like Hybe, SM Entertainment, YG Entertainment, and JYP Entertainment, is not only driven by their vertical integration business model and global market expansion, but also by the strong performance of live shows and merchandise sales in the entertainment industry.
