How Scandals Affect Stock Prices of Entertainment Companies
Scandals and controversies in K-pop take a toll not only on artists, but on companies as well. Often, investors will sell or buy stocks in response to good or bad news about a company or its artists. While a successful comeback or debut may raise the stock price a few points, scandals can make company stocks drop sharply, causing losses of millions of dollars in just a single day. Here are how issues in K-pop have affected the stock price of some of the biggest entertainment agencies in Korea.
When former EXO member Kris Wu sued to nullify his contract with SM Entertainment in May 2014, the company’s stock suffered a massive price drop. At the beginning of the month, shares were trading at 52,300 won (approximately $46) when they began to drastically fall, finally reaching a low of 35,000 won (approximately $31) by late June. The total loss was equal to $309 million.
After SM stocks hit their low and were beginning to recover, they were beat back down again by news of Jessica leaving SM Entertainment. The company’s stock price ended up falling from 40,750 won (approximately $36) to 37,400 won (approximately $33). At that time, there were around 20.6 billion shares of SM, which resulted in a cumulative loss of 69.1 billion won (approximately $65 million).
SM’s stocks took a month to regain their previous levels, but they didn’t stay there for long….
After Luhan sued to break his contract in November 2014, the company’s stocks dropped once again, down to 27,100 won (approximately $24). In fact, to this day, SM’s stock price has still never fully recovered to where it was before Kris’s lawsuit was filed.
Tzuyu waving a Taiwanese flag on TV caused a stir in China, and the controversy caused JYP Entertainment’s stock price to drop from 4,540 won (approximately $4) to 4,140 won (approximately $3.60) in a single day, losing almost 10 percent of its value. Across all shares, this is a loss of 13.6 million won (approximately $11,800).
JYP Entertainment’s stock price dropped sharply after the Sewol ferry incident in April 2014. After investors heard news that Park Jin Young’s wife’s uncle was both a billionaire and the owner of the Sewol ferry, rumors of corruption and financial connections began to spread. JYP denied receiving any funds, but the rumors still caused the stock to drop from 6,000 won (approximately $5.20) to 4,500 won (approximately $3.90), a 25 percent decrease.
When rumors of 2NE1 member Park Bom smuggling drugs into Korea began circulating in 2014, YG Entertainment’s stock price dropped from 44,500 won to 37,000 won (approximately $38.50 to $32.00). The stock price was saved by YG boy group WINNER, who debuted in August and rallied the stock price back up to 52,900 won (approximately $45.80).
IU was embroiled in a number of scandals in 2015 that coincided with a drop in the stock price of her agency, LOEN Entertainment. The share price was 79,900 won (approximately $69) on November 3rd, but after the controversy about her songs lyrics began, it dropped to a low of 64,300 won (approximately $56) by November 12. Based on the total amount of LOEN shares, this is a loss of 394.5 billion won (approximately $342.7 million).
kafox is a K-pop addict and avid viewer and subtitler of Korean dramas on Viki.