Hybe, the company behind BTS, saw its shares surge 10% on projections of record results from its tours

Hybe, the company behind K-pop group BTS, saw its shares surge 10% this Friday as investors weighed optimistic projections for its third-quarter results, underpinned by its artists' international tours. The gain far outpaced the South Korean Kospi index, which rose 2.9% after the previous session's 7% plunge amid the wave of selling in the AI sector. According to a report by local brokerage iM Securities, cited by CNBC, Hybe's third-quarter revenue would reach 1.5 trillion won (US$1.11 billion), up 106% from a year earlier, while operating profit would come in at 172.2 billion won. The concert business alone would contribute 717 billion won, nearly triple the figure for the same period last year. During the period, BTS's world tour included 16 stadium shows in North America and eight in Europe. Added to that was the expansion of tours by the label's newer groups, such as Enhypen, Katseye and Cortis. In total, according to iM Securities, attendance at the company's concerts approached 3 million people, which could set a quarterly record. The tour also has Chile among its stops. BTS performed on October 14 and has a show today the 16th and tomorrow the 17th at the National Stadium as part of its BTS World Tour "Arirang." Tickets sold out quickly. These dates, however, fall in the fourth quarter, so they are not part of the brokerages' estimates for the July-September period. BTS at the National Stadium. The report also highlights that, for the first time, Western markets accounted for more than 70% of Hybe's total concert audience, reflecting its growing international reach as its newer artists gain ground in North America and Europe. Despite the adverse effect of the exchange rate, the brokerage expects record revenue in concerts, merchandise and licensing. Margins under scrutiny The main question lies in profitability. iM Securities warns that higher royalty payments to established artists and the initial costs of the newer groups' tours will pressure margins, though it projects that Hybe will maintain a double-digit operating margin, supported by the scale of BTS's tour. That factor already hit the stock after the second-quarter results were released on July 28. In less than 24 hours, the company lost as much as US$1.96 billion in market capitalization, even though its revenue and operating profit hit all-time highs. According to analysts cited at the time by CNBC, the drop was due to margins coming in below expectations. BTS at the National Stadium. Jiwoo Oh, an analyst at CGS Securities, explained to CNBC after those results that concerts and performances involve higher costs for Hybe due to greater revenue sharing with artists, while the merchandise, content and fan club businesses significantly boost the bottom line. The analyst noted that in the second quarter of 2026 the company posted an operating margin of 11.8%, with revenue directly tied to artists equivalent to 72% of total sales, and concerts alone representing 45%. "We believe this demonstrates that stadium-scale operating leverage can more than offset the higher cost base associated with concerts," Oh said. NEWSLETTER Pulso PM Monday to Friday, 12:30 PM The most relevant news on markets, companies and business: timely information, context and content to make better decisions. By subscribing you are accepting the Terms and Conditions and Privacy Policies of La Tercera.