BTS military discharge boosts HYBE stocks amid lingering chairman risk

Jungkook, left, and Jimin of BTS salute at Yeoncheon Public Stadium in Yeoncheon, Gyeonggi Province, Wednesday, as they complete their military service. Yonhap

Expectations are growing for a rebound in HYBE's stock price as all BTS members have completed, or are soon expected to complete, their mandatory military service, according to market analysts, Wednesday.

However, concerns are also mounting that Bang Si-hyuk, founder and chairman of the K-pop powerhouse corporation, could have a negative impact on the stock, as he is under investigation by the Financial Supervisory Service (FSS) for alleged violations of the Capital Markets Act, they said.

On Tuesday, when RM and V were discharged from the military, HYBE shares closed at 309,000 won ($226), up 2.32 percent from the previous trading day. This marked the highest closing price since April 2022.

HYBE's stock had reached 301,000 won on June 23, 2023, before experiencing a series of fluctuations and eventually falling to 158,000 won by Sept. 23 last year.

On Wednesday, when Jimin and Jungkook were discharged, HYBE shares closed slightly lower, down 2.83 percent from the previous day at 300,250 won.

Jin and J-Hope completed their service in June and October of last year, respectively. With RM and V discharged, followed by Jimin and Jungkook, and Suga set to finish his service on June 21, HYBE is now in a position to fully prepare for BTS' return as a complete group.

"BTS' return from military service marks the beginning of preparations for full-group activities," Choi Min-ha, an analyst at Samsung Securities, said. "We anticipate a comeback with a tour that surpasses previous ones in scale."

HYBE is already planning to hold "2025 BTS FESTA" this Friday and Saturday at KINTEX in Goyang, Gyeonggi Province.

Expectations are also rising for renewed momentum in fandom-driven business initiatives and the reactivation of existing IP-based ventures.

In addition, the entertainment company's accelerating push into the Chinese market is emerging as another positive catalyst for its stock performance.

HYBE established its fourth overseas branch, HYBE China, in Beijing on April 2.

With the start of the liberal Lee Jae-myung administration fueling hopes for the easing of China's unofficial ban on Korean cultural content since 2016, HYBE is expected to benefit alongside other major Korean entertainment companies, including SM Entertainment and YG Entertainment.

HYBE Chairman Bang Si-hyuk / Courtesy of HYBE

Despite the thriving business, the risk posed by Bang is weighing on the company.

Bang is currently being investigated by the FSS for allegedly defrauding investors and illegally gaining about 400 billion won during HYBE's IPO process.

The financial watchdog suspects that these actions may have involved fraudulent and unfair trading that disrupted the capital markets, and plans to fast-track the case to prosecutors for a swift investigation.

If proven guilty, Bang could face severe penalties, including prison sentences ranging from five years to life imprisonment, due to the large-scale illegal gains involved.

The risks surrounding Bang have put increasing pressure on HYBE, as the global K-content leader is required to maintain ethical practices and transparent management to earn the trust of international investors and shareholders.