South Korea’s largest K-pop agency, Hybe, reported record revenue and operating profit in its second quarter, largely driven by the success of BTS’ concerts. Despite these strong financial results, the company’s shares experienced a steep decline, losing up to 2.845 trillion won ($1.96 billion) in market value within 24 hours. The stock dropped more than 16% on Tuesday and extended losses on Wednesday to reach its lowest level since September 2024.

Analysts attributed the sharp stock decline to concerns about profit margins rather than revenue growth. Although BTS’ Arirang tour significantly boosted concert revenue—which surged 243% year-over-year and 630% from the previous quarter—concerts carry lower profit margins as a large portion of earnings is paid out to artists. The agency’s operating margin of 11.8% missed expectations from SK Securities and Eugene Securities, both of which had forecast margins above 12%.

Market expectations had favored merchandise sales as the driver of revenue growth, given their higher profitability with margins sometimes reaching up to 50%. Instead, the heavier reliance on concert income increased cost pressures and reduced overall profitability. Hybe projects more than 200 concerts in the second half of 2026, following 119 concerts in the first half, the most the company has scheduled since 2021, which investors are watching cautiously.

Despite the recent share price drop, brokerages maintained positive outlooks on Hybe's future earnings, citing the potential for increased merchandise production and expanded tours by emerging groups like Cortis and Katseye. Additionally, the return of girl group NewJeans—whose contract was recently confirmed as valid by a South Korean court through 2029—is expected to further contribute to the company’s growth prospects.