HYBE and SM Entertainment stocks surged on July 7 as South Korean entertainment shares defied a broader market crash that triggered a circuit breaker. HYBE closed 7.91% higher at 232,000 won while SM Entertainment gained 6.09% to 81,900 won, even as the KOSPI index plunged over 8% intraday and halted trading for 20 minutes. The rally followed government data showing Hallyu-driven exports reached 18.975 billion USD last year — an 84% year-over-year increase — and brokerage analysis indicating entertainment sector valuations had dropped from historical P/E ratios of 20–35x to current levels of 12–22x. Analysts attributed the outperformance to oversold conditions and anticipation of HYBE's second-quarter earnings release scheduled for August 12, with consensus operating profit estimates at 148.5 billion won.
Entertainment Stocks Outperform During Market Circuit Breaker
According to the Korea Exchange, HYBE shares rose 7.91% to close at 232,000 won on July 7. SM Entertainment gained 6.09% to finish at 81,900 won. Intraday, both stocks climbed even higher — HYBE peaked above 10% gains while SM Entertainment exceeded 8%. Dear U advanced 3.6% and JYP Entertainment rose 0.93%. The performance stood out as the KOSPI index triggered a circuit breaker after dropping more than 8% intraday, suspending trading on the main board for 20 minutes.
Hallyu Export Revenue Surges 84% Year-Over-Year
The Ministry of Culture, Sports and Tourism and the Korea Foundation for International Cultural Exchange reported that total export revenue driven by Hallyu reached 18.975 billion USD last year. This represented an 84% increase compared to the previous year. The surge was attributed in part to the success of the Netflix animated film "K-pop Demon Hunters."
Entertainment Sector P/E Ratios Drop to Multi-Year Lows
Shinhan Investment & Securities analysis showed that the entertainment sector's price-to-earnings ratio has fallen from a historical range of 20–35x to current levels of 12–22x. Brokerage firms assessed entertainment stocks as oversold and undervalued at present levels. This valuation compression contributed to improved investor sentiment on July 7.
HYBE Q2 Earnings Release Set for August 12
Market attention has focused on HYBE's second-quarter earnings announcement scheduled for August 12. Financial data provider FnGuide compiled a consensus operating profit estimate of 148.5 billion won for HYBE's Q2 results. Shinhan Investment & Securities forecast 161.2 billion won while NH Investment & Securities projected 162.4 billion won — both above the consensus.
Ji In-hae, analyst at Shinhan Investment & Securities, stated: "HYBE has entered a capital expenditure recovery phase this year, with BTS returning as a cash cow and new intellectual property results from ILLIT and KATSEYE opening upside to earnings. Improved sentiment for HYBE could lead to basket buying opportunities for KOSDAQ entertainment stocks that have been neglected."
Lee Hwa-jeong, analyst at NH Investment & Securities, noted: "The music revenue growth momentum confirmed in HYBE's first-quarter results will clearly gain traction in the second quarter. Furthermore, major artists with strong performance in the global music market, such as Stray Kids, have activities scheduled for the third and fourth quarters."
FAQ
What did HYBE and SM Entertainment stocks do on July 7?
HYBE shares closed 7.91% higher at 232,000 won on July 7, while SM Entertainment gained 6.09% to 81,900 won. Both stocks rose even as the KOSPI index dropped over 8% intraday and triggered a circuit breaker that halted trading for 20 minutes.
Why did entertainment stocks rise during the market crash on July 7?
Analysts attributed the rally to government data showing Hallyu export revenue reached 18.975 billion USD last year (up 84% year-over-year) and brokerage analysis indicating entertainment sector P/E ratios had fallen from 20–35x to 12–22x, signaling oversold and undervalued conditions.
When is HYBE's second-quarter earnings release scheduled?
HYBE's Q2 earnings announcement is scheduled for August 12. Consensus operating profit estimates stand at 148.5 billion won, with some brokerages forecasting results above 161 billion won.
