HYBE’s financial troubles seem unrelenting this year, with the company’s stock prices plunging to unprecedented lows following the new CEO announcement.
Did The New CEO Announcement Cause HYBE Stock Prices to Plummet?
Earlier this week, it was revealed that Lee Jae Sang, the current Chief Strategy Officer (CSO), will replace Park Ji Won as HYBE’s CEO. This decision was met with disapproval from fan communities, as Lee’s past controversies resurfaced almost immediately after the news broke. The stock market also reacted negatively to this sudden leadership change, with HYBE stock hitting its lowest price in 18 months on Thursday, July 25.
(LEAD) Hybe Names Lee Jae-sang as New CEO, Replacing Park Ji-won#하이브 #새CEO #이재상 #CSO이재상 #LeeJaeSang_Hybe #LeeJaeSang #Hybe_CEO #newCEO #replacing_ParkJiWon #ParkJiWon @HYBEOFFICIALtwt #MinHeeJin @NewJeans_ADOR @BIGHIT_MUSIChttps://t.co/Tc5b4ELth5 pic.twitter.com/cwtA3wYfWR
— K-VIBE (@kvibe_yonhap) July 24, 2024
HYBE shares closed at ₩170,000 KRW (approximately $123 USD) on Thursday, marking the lowest point since January 2023. This decline occurred just a day after the announcement of Lee Jae Sang’s appointment as CEO. The stock had previously been recovering from a dip caused by BTS’s hiatus announcement.
Who is Lee Jae Sang?
HYBE has yet to hold its shareholder and board meetings where the final decision to appoint Lee Jae Sang as the new CEO will be made. Lee joined HYBE in 2018, back when it was still known as Big Hit Entertainment.
Following the disclosure of Lee’s appointment, numerous allegations against him began circulating on community sites. These allegations included accusations of “threatening” ADOR’s former vice president and coercing them into revealing private conversations with CEO Min Hee Jin. Additionally, Lee has faced criticism for his involvement in acquiring Ithaca Holdings while he was the CEO of HYBE America, as well as for co-establishing an NFT company aimed at creating NFTs using HYBE artists.
"Lee Jae Sang",
pre-candidate to lead the company "@HYBE 2.0" and preparations for the change of leadership. He has diverse experience. International consultancy such as: Monitor Group, Hyundai Motor Company and Google.#LeeJaeSang_Hybe#HYBE pic.twitter.com/EKTC9CFfqC— 윤기슈가Agust'D-Lec! (@LeciSantos60) July 24, 2024
The acquisition of Ithaca Holdings in 2021 has been particularly contentious. HYBE America has reported significant net losses for two consecutive years following the purchase. The losses amounted to ₩70.1 billion KRW (approximately $50.8 million USD) in the first year and ₩142 billion KRW (approximately $103 million USD) in the second year. This acquisition has been viewed by many as a financial misstep, contributing to HYBE’s ongoing struggles.
HYBE America’s investment in the NFT company Levvels has also proved to be a financial burden. In 2023, the investment generated an operating loss of ₩18.0 billion KRW (approximately $13.0 million USD). The financial strain continued into the first quarter of 2024, with the company recording a loss of ₩3.50 billion KRW (approximately $2.53 million USD).
What Will Happen to HYBE?
The controversies and financial losses associated with Lee Jae Sang have understandably caused concern among investors and fans alike. His past decisions and the financial repercussions of those decisions are now being scrutinized more than ever as he steps into the role of CEO. The market’s reaction to his appointment reflects a broader uncertainty about the future direction of HYBE under his leadership.
As HYBE prepares for its upcoming shareholder and board meetings, the company faces the dual challenge of restoring investor confidence and addressing the internal and external criticisms leveled against its new CEO. The outcome of these meetings and the company’s subsequent actions will be crucial in determining whether HYBE can navigate through these turbulent times and regain its footing in the competitive entertainment industry.