The Contract Renewal of Blackpink Put YG Shares on a Wild Journey. Why K-Pop Contracts are Important?

In the highly competitive K-pop music industry, Blackpink, one of the world’s biggest girl groups, faced a stock rollercoaster as members renewed their contracts with YG Entertainment. In September, YG Entertainment’s shares on the Kosdaq experienced significant declines on two occasions amid reports that three Blackpink members would not renew their contracts.

Despite the uncertainty, YG Entertainment’s stock has risen 23.38% year-to-date as of Nov. 21. Recent reports suggest that individual members will not renew exclusive contracts with YG but will continue group activities as Blackpink under the label. Analysts have mixed sentiments about this development.

Samsung Securities’ Minha Choi cut the target price for YG Entertainment by 9.5% to 76,000 won, citing uncertainty and the company’s reliance on a few artists. On the other hand, NH Investment and Securities maintained a “buy” rating with a target price of 87,000 won, noting that YG’s share price has factored in major risks, including artist departures. Blackpink, a highly successful act for YG, has achieved global milestones, including headlining Coachella, topping the Billboard 200, and holding the Guinness World Record for the most-viewed music channel on YouTube for a group.

In the K-pop industry, contract renewals are crucial due to standardized seven-year contracts, often referred to as the “seven-year curse,” where groups disband at the end of their contracts. YG Entertainment’s stock performance will be closely watched amid ongoing developments with Blackpink and potential impacts on the company’s artist lineup and overall business.

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