K-pop's global clout is soaring — so why are entertainment stocks stuck?

K-pop's global influence has grown beyond easy comparison with the past, yet share prices of South Korea's major entertainment companies remain stubbornly weak.

Established "mega intellectual property" acts — BTS, Stray Kids, BLACKPINK and BIGBANG — still command strong pulling power, but the market's attention has shifted to the next-generation acts that will follow them. Analysts in the securities industry say the entertainment sector has entered a full-blown period of generational transition.

Hybe's share price stood at 165,900 won ($122) on Friday, well below its 52-week high of 404,500 won. JYP Entertainment was trading at 38,500 won, also short of its 52-week high of 85,000 won, while YG Entertainment was at 43,850 won — less than half its 52-week high of 105,500 won.

On the global stage, K-pop's standing has only risen. Stray Kids generated $185.7 million in sales from their world tour last year, ranking 10th among all artists worldwide on the Billboard chart — the highest placement ever for a K-pop act.

The pace at which rookie groups break into Western markets has also accelerated sharply. YG Entertainment's Babymonster entered a North American world tour just 11 months after their debut, while Hybe's Katseye reached North America within 12 months.

Even so, share prices have failed to keep pace with K-pop's global growth for a common reason: concern over the future IP pipeline. As flagship artists accumulate years of activity, the likelihood of schedule gaps — from contract renewals, mandatory military service and members moving to different agencies — has grown. Whether companies can secure younger, newer IP to sustain earnings has begun to determine corporate value.

That concern is most acute at Hybe. This year is expected to deliver record earnings, driven by BTS's return to full-group activities. SK Securities projected Hybe's sales this year at 5.11 trillion won, up 93.2 percent year on year, with operating profit at 301.8 billion won, a 504.9 percent increase. The growth of younger IP acts such as Cortis and Katseye alongside BTS is also expected to contribute to the earnings expansion.

The question is what happens once BTS's activity level eases. BTS's plans for the second half of next year have not yet been disclosed, and SK Securities forecast Hybe's 2027 sales at 4.62 trillion won, a 9.8 percent decline.

SK Securities maintained its "buy" investment opinion on Hybe but cut its target price from 350,000 won to 290,000 won, factoring in both the heavy dependence of this year's profit on the BTS world tour and a broader decline in entertainment sector valuations.

JYP Entertainment also holds a powerful mega IP in Stray Kids, but generational transition remains a medium- to long-term challenge. SK Securities forecast JYP's sales this year at 866.5 billion won and operating profit at 163 billion won, up 5.2 percent and 5.0 percent respectively from a year earlier.

On the positive side, Stray Kids' new album sold approximately 3.3 million copies in its first week, and their world tour has expanded to dome and stadium venues, signaling continued fandom growth.

On the other hand, TWICE recently wrapped up a world tour, and uncertainty over full-group activities has grown following the departures of Jeongyeon and Chaeyoung from the agency. Stray Kids, too, will find it difficult to avoid future disruptions from mandatory military service.

That makes the growth of follow-up acts — NMIXX, Nexz and Kickflip — a key variable in defending earnings during any mega IP gap. SK Securities maintained its "buy" opinion and target price of 66,000 won for JYP Entertainment.

YG Entertainment faces a similar situation. This year is a concentrated period of activity for its established mega IP, coinciding with the company's 30th anniversary, BIGBANG's 20th anniversary and BLACKPINK's 10th anniversary.

As a result, YG's sales this year are forecast at 686.7 billion won and operating profit at 92 billion won, up 25.9 percent and 28.9 percent respectively. The BIGBANG world tour and the growth of Babymonster and Treasure are also contributing to earnings.

Next year, however, a gap in mega IP activity is already on the horizon. SK Securities projected YG's 2027 sales and operating profit at 526.9 billion won and 68.3 billion won respectively — down 23 percent and 26 percent from this year.

Ultimately, how quickly Babymonster expands into Western markets and how fast the new male group set to debut this month grows will determine the company's future earnings trajectory. SK Securities maintained its "buy" opinion and target price of 63,000 won for YG Entertainment.

Analysts broadly agree that for entertainment stocks to regain upward momentum, companies must prove what comes after their current mega IP — not just the continued success of existing acts. While the global K-pop market has grown, a failure to produce new IP capable of filling the void left by aging flagship groups could amplify volatility in both earnings and corporate value.

Conversely, if rookie groups can rapidly build global fandoms and grow into mega IP in their own right, the ongoing generational transition could become a fresh catalyst for a rerating of the entertainment sector.

Park Jun-hyung, an analyst at SK Securities, said of Hybe that "younger IP changes the quality of earnings" and that "the company's high dependence on a single IP makes securing new rookie IP essential." On YG Entertainment, Park said the company is in "a period of generational transition," adding that "2027 is a stretch where a scheduled gap in mega IP activity means earnings must be defended by existing IP alone."