HYBE stock hits 18-month low after announcement of incoming CEO

Industry

Published: 25 Jul. 2024, 17:02

HYBE stock hits 18-month low after announcement of incoming CEO

Lee Jae-sang, the chief strategy officer (CSO) of HYBE designated as the company's new CEO at left, and Min Hee-jin, CEO of HYBE label ADOR [HYBE]

HYBE stock hit its lowest price in a year and six months on Thursday, a day after announcing the replacement of the current CEO with a chief strategy officer (CSO) accused of “threatening” an ADOR executive during the internal audit of the NewJeans agency earlier this year.

HYBE shares closed at 170,300 won ($123) on Thursday, down 4 percent from the previous day. It is the stock's worst performance since January 2023, when shares were recovering from a steep nose-dive in late 2022 following an announcement that BTS would be going on hiatus so that the members could finish their military duties.

The agency announced Wednesday that it will pass an item at its shareholder and board meetings to appoint Lee Jae-sang as the company’s new CEO to replace the current head, Park Ji-won. The dates of the meetings were not disclosed.

Lee currently serves as CSO, having joined the company, then called Big Hit Entertainment, in 2018 after stints at Hyundai Motor Group and Google. He has led major business decisions since, especially in investments and mergers, according to HYBE.

Following the announcement, posts were uploaded on the online community TheQoo accusing Lee of “threatening” ADOR’s former vice president by saying that they could “get into serious trouble,” coercing them into revealing private conversations with ADOR CEO Min Hee-jin. Min mentioned Lee’s actions during her press conference on April 25.

Captures images of posts about CSO Lee Jae-sang blocked from online communities on July 25 [SCREEN CAPTURE]

Posts titled “HYBE’s CEO-designate CSO Lee Jae-sang is the person who threatened Min Hee-jin’s aide in the past” and “The shocking identity of CSO Lee Jae-sang, designated as HYBE’s new CEO” were uploaded on Wednesday evening, but were soon taken down by the website “as requested by HYBE.”

Since the content of the posts was blocked, screen captures of HYBE blocking the posts instead circulated on different communities, such as Instiz and Nate Pann. The agency confirmed that the CSO was at the questioning but said he did not threaten anyone.

“Lee was at the questioning session but no such threatening took place,” a HYBE official told the Korea JoongAng Daily.

Lee began sitting as an ADOR board member on May 31, when HYBE voted to remove two former board members and replace them with three new members recommended by the parent company during a shareholder meeting of the sub-label held that day. HYBE owns 80 percent of ADOR and Min owns 18 percent.

Pop star Justin Bieber congratulating HYBE and Ithaca Holdings for the acquisition in a video in April 2021

Other negative online posts also took issue with the projects Lee pursued during his term as the CEO of HYBE America, namely buying U.S. entertainment company Ithaca Holdings in 2021 and co-establishing a non-fungible token (NFT) company named Levvels with Dunamu in 2022 to create NFTs using HYBE artists.

Lee joined HYBE America as the chief operating officer in 2021 and soon began his term as the CEO the same year, although the month was not specified by HYBE.

After buying Ithaca Holdings in April 2021, HYBE America proceeded to log annual net losses of 70.1 billion won in 2022 and 142.4 billion won in 2023. HYBE owns 100 percent of HYBE America, which owns 100 percent of Ithaca Holdings.

HYBE America invested 17.5 billion won and Dunamu 34.5 billion won to establish Levvels, taking 35 percent and 65 percent of shares, respectively. Levvels posted an operating loss of 3.5 billion won during the first quarter of 2024, adding to a loss of 18 billion won in 2023.

BY YOON SO-YEON [yoon.soyeon@joongang.co.kr]