Big Hit Entertainment's Initial Public Offerings [IPO] saw a steep decline in the stock price making BTS fans who bought the shares worried. On the first day of trading, the music company boasted of more than 30 percent surge in its stock, but lost some face on the second day of trading.
The stocks fell 4.44 percent by closing time on the first day. The trend continued and it fell 22.29 percent, closing at $176 [200,500 KRW] on the second day. The value declined from its highest price $307.26 on the first day. The average loss that individual investors had to bear was 24 percent in just two days.
Amateur Buyers in Panic
Allkpop reported that individual investors' average purchase price was $231 [263,804 KRW] for two days. But due to the plunge on the second day, individuals have lost $55.6 [63,304 KRW] per share. Many individuals who bought the shares due to the fandom of BTS expressed concern over the plunge in stock price of Big Hit Entertainment.
Netizens were seen asking if there are any chances of them getting a refund. Amateur buyers were commenting that it was their first time buying stocks and asked if there was any way they could get their money back.
One of the comments read that it had been just 24 hours since buying the stock, and he wanted to know if he can get a refund by submitting a petition. Another individual was seen writing that he had bought the shares using his wedding funds.
Reports claim that most of the investors who bought the shares on the first day the company went public were first-time investors. Big Hit Entertainment became South Korea's third largest IPO of the year and at least 10 million tradable shares changed hands on October 15.
Company Relies Heavily on BTS Revenue
Big Hit Entertainment that entered the stock market with $11.4 billion [9.6 trillion won] on the first day relies heavily on the boy band BTS for revenue. BTS amounted to 87.7 percent of the label's revenue in the first half of 2020. Reuters quoted Hyundai Motor Securities analyst Kim Hyun Yong stating that various factors including BTS members military enlistment might result in fluctuations in the rates of the shares.
If BTS members are not allowed to defer their military enlistment, Jin will have to enlist in military by the end of 2021 and rest of the six members will have to enlist in the following five years. Members' absence from the group for 21 months each is likely to hit their performances as well, affecting the revenue of the band that will also reflect in the Big Hit Entertainment stocks.
According to Bloomberg, after the huge surge in stocks on the first day, 48-year-old Big Hit Entertainment founder Bang Si Hyuk made good money and was said to have a net worth of $2.8 billion currently. Each BTS member is said to be the owners of shares worth 18.5 billion.