HYBE Faces Major Crisis as NewJeans Announces Exit, Shares Plunge Nearly 7%
HYBE Corporation, one of South Korea’s most prominent entertainment agencies, is reeling after the sensational announcement that NewJeans, a globally popular girl group, has decided to terminate their contracts with the agency. This dramatic move, citing a breach of contract, was revealed during an emergency press conference held by all five members: Minji, Hanni, Danielle, Haerin, and Hyein.
The fallout has been severe, with HYBE’s shares plummeting by 6.97% on Friday, wiping out over $423 million in market capitalization, according to CNBC.
Dispute Between NewJeans and ADOR
NewJeans, formed in 2022 under ADOR, a sub-label of HYBE, quickly rose to fame as one of the most successful girl groups of the fourth generation of K-pop. Known for their unique musical style and global endorsements with brands like Gucci, Calvin Klein, and Louis Vuitton, their swift rise to stardom set them apart from their peers.
However, tensions between ADOR’s former CEO Min Hee Jin, credited with much of the group’s success, and HYBE’s chairman Bang Si Hyuk reportedly escalated in recent months. The conflict, centered on the management of the group, culminated in Min Hee Jin’s resignation on November 20 and the members’ decision to part ways with ADOR.
During their press conference, the members accused ADOR of failing to protect their interests. Hanni shared, “Staying here would be a waste of time and would only bring mental pain,” highlighting the challenges the group faced under the agency. They also outlined five demands in a legal notice sent to HYBE, including an apology for alleged bullying incidents and the reinstatement of Min Hee Jin as CEO.
ADOR’s Response and Market Impact
ADOR has dismissed the group’s exit announcement as “invalid,” asserting that NewJeans lacks legal grounds to terminate their contracts. Nevertheless, the market’s reaction has been stark. The turmoil caused HYBE’s stock to suffer one of its steepest declines in recent memory, exacerbating concerns over the agency’s management practices.
HYBE’s financial struggles extend beyond NewJeans’ exit. In its Q3 2024 earnings report, the company revealed a 99% year-over-year drop in net profits. Analysts attribute this decline to lower sales during the Olympics and significant expenses related to the launch of their new group, KATSEYE. This downturn aligns with a broader slump in South Korea’s entertainment sector, where all four major K-pop agencies have experienced declining stock prices.
What’s Next for NewJeans?
While NewJeans’ departure from ADOR is a significant blow to HYBE, it marks a potential turning point for the group. Industry insiders speculate that the members could form their own independent label or join another agency, leveraging their global popularity and strong fan base.
For HYBE, the challenge lies in navigating this crisis and restoring investor confidence. The company’s reliance on flagship artists, including BTS, has been a double-edged sword, and the loss of NewJeans highlights the risks of overdependence on a few key acts.
As the dust settles, the K-pop industry—and fans worldwide—will be watching closely to see how this high-stakes conflict unfolds.
