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BTS label Big Hit soars in market debut

Yahoo Finance's Ines Ferre shares the details on Big Hit Entertainment's public market debut.

Video Transcript

BRIAN SOZZI: BTS mania has descended onto the stock market. Ines, hit us with the details of the big entertainment IPO and also the risks. You know, this is not a quick rich scheme here. I mean, there are risk to this company.

INES FERRE: There sure are. Let's first start with where the stock closed at 258,000 won. That's about $225 a share. That's 90% its IPO price of about $118 a share. As you mentioned, there are risks when it comes to this company which manages BTS, that popular K Pop group. About 88% of Big Hit Entertainment's revenue comes from BTS, so there is the risk there, and the company has recently acquired some other labels to try and bring in more groups, but there's no guarantee that those groups will be as popular as this K Pop group is, as BTS.

Also military service in South Korea is mandatory between the ages of 18 to 28 for two years. Now, the oldest member is 27 years old, so he would have to enlist before the end of 2021. There are fans and some members of parliament which are considering a bill that would allow the group members to delay military service, but we have to see if that will happen. If not, what would happen if the group has to perform without some of the other members?

Also, another risk is that Big Hit also noted that the group's reputation is a potential risk for the company in its filing. So if there is a member that gets into trouble, if some life circumstance happens, that could derail the success, the potential success of this group and of course its reputation. Nevertheless, this is a massively popular group. Their concerts during the pandemic, of course, revenues went down, because these concerts had been canceled, but they did do streaming concerts that were very popular, and album sales jumped 80% this year. So overall, sales were down only 8% this year compared to last year. Not bad for a pandemic year.

BRIAN SOZZI: Not bad. Thanks so much, Ines.