Big Hit Entertainment, the record label behind popular K-pop boy band BTS, is now publicly trading on the KOSPI. The stock opened at 270,000 won (USD$235) and saw a surge in price its first day, followed by a second-day drop.
Volatility immediately after an IPO isn't unusual, and it's too early to tell what the long-term movement of the stock could look like. If you're willing to bet that the label's value will grow, the best way for US investors to gain exposure is by purchasing an ETF that invests in South Korean stocks.
How to invest in Big Hit Entertainment from the US
Because Big Hit Entertainment’s stock will only be available on the South Korean market, it may be difficult for US investors to buy stocks. But there are a few different ways you can gain exposure.
1. Buy ETFs
The easiest way to gain exposure to South Korean stocks is invest in exchange-traded funds (ETFs) that offer international coverage — specifically those that invest in South Korean stocks, like Renaissance Capital’s International IPO ETF or the iShares MSCI South Korea ETF. While this doesn’t allow you to buy Big Hit Entertainment stock directly, it does give your portfolio exposure to South Korean stocks — possibly including Big Hit.
2. Wait for an ADR
You may also be able to invest in Big Hit Entertainment by purchasing American Depositary Receipts (ADRs) — certificates that represent shares of foreign stock that can be purchased from a domestic brokerage account. While there’s no guarantee that Big Hit Entertainment will release ADRs to US investors, it’s a possibility given the popularity of its IPO. If you decide to purchase an ETF or wait for an ADR, you’ll need a domestic brokerage account. Compare your options to find the best fit.
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3. Use an international brokerage account
Most US brokerages only offer access to US stock exchanges, like the NYSE and NASDAQ. If you want to buy Big Hit Entertainment stock directly, you’ll need an international brokerage account. But even then, it may be difficult. Most brokerage accounts available in the US, including Interactive Brokers and Fidelity, don’t offer access to the South Korean markets. South Korea places restrictions on foreigners buying stock, which means that to invest you’ll need to do extensive research and fill out the appropriate paperwork. This option is best suited to advanced investors who plan to buy stocks in South Korea on a regular basis and/or make high-dollar investments.
What we know about the Big Hit Entertainment IPO
Demand for Big Hit Entertainment’s stock is high among retail and institutional investors alike. In fact, some 1,420 institutional investors wanted pre-subscription access to Big Hit’s IPO, amounting to 1,117 times the subscription amount allotted to institutional investors.
The stock was originally expected to cost 135,000 won, but ended up opening much higher at 270,000 won (USD$235). The stock launched on October 15 in South Korea, and is now trading on the KOSPI. The company's pre-IPO valuation stood at $4.1 billion, making this South Korea’s biggest IPO since 2017.
Unfortunately, shares aren't be available on any US domestic exchanges, and so far we haven't heard anything suggesting the company is planning to launch a US IPO. If you want to purchase stocks from the US, you'll need an international brokerage account.
Company history
Big Hit Entertainment is an entertainment company founded in 2005 by Bang Si-hyuk and headquartered in Seoul, South Korea. With nearly 800 employees, the company manages and produces music for a number of K-pop groups and solo acts, including J-Hope, Lee Hyun, TXT and boy band sensation, BTS — the cause of Big Hit’s IPO buzz. Despite managing numerous solo performers and groups, most of Big Hit Entertainment’s incoming cash comes from BTS. In 2019, 97% of the company’s revenue was BTS-related. And now that the company is going public, fans of the seven-member K-pop idol group are clamoring to get their hands on a slice of what’s being referred to as BTS stock. The good news is that the members of BTS are profiting from Big Hit Entertainment’s IPO — as they should. The company awarded each member of the band 68,385 shares, amounting to $7.9 million apiece.
How do similar companies perform?
It's impossible to predict how any stock will perform — and IPOs can be particularly volatile. Looking at the performance of similar companies can help you decide if now is a good time to buy Big Hit Entertainment stock.
See how the following stocks are performing, and view details like market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield.
Company summary
Sirius XM Holdings Inc. operates as an audio entertainment company in North America. It operates in two segments, Sirius XM, and Pandora and Off-platform. The company's Sirius XM segment provides music, sports, entertainment, comedy, talk, news, traffic and weather channels, and other content, as well as podcast and infotainment services on subscription fee basis; and live, curated, and exclusive and on demand programming services through satellite radio systems and streamed through applications for mobile and home devices, and other consumer electronic equipment. This segment also distributes satellite radios through automakers and retailers, as well as its website; podcasts, including true crime, news, politics, music, comedy, sports, and entertainment; and offers location-based services through two-way wireless connectivity, including safety, security, convenience, maintenance and data, remote vehicles diagnostic, and stolen or parked vehicle locator services. In addition, this segment provides music channels on the DISH Network satellite television service as a programming package; Travel Link, a suite of data services that include graphical weather, fuel prices, sports schedule and scores, and movie listings; graphic information related to road closings, traffic flow, and incident data for consumers with in-vehicle navigation systems; real-time weather services in vehicles, boats, and planes; and music programming and commercial-free music services for office, restaurants, and other business. Its Pandora and Off-platform segment operates music, comedy, and podcast streaming platform, which offers personalized experience for listener through computers, tablets, mobile devices, vehicle speakers, and connected devices; and provides advertising services. The company was incorporated in 2013 and is headquartered in New York.
Sony Group Corporation designs, develops, produces, and sells electronic equipment, instruments, and devices for the consumer, professional, and industrial markets worldwide. The company distributes software titles and add-on content through digital networks; network services related to game, video, and music content; and home and portable game consoles, packaged software, and peripheral devices. It also develops, produces, markets, and distributes recorded music; publishes music; and produces and distributes animation titles, game applications based on animation titles, and various services for music and visual products. In addition, the company produces, acquires, and distributes live-action and animated motion pictures for theatrical release, as well as scripted and animated series, unscripted reality or light entertainment, daytime serials, game shows, television movies, and miniseries and other television programs; operates a visual effects and animation unit; manages a studio facility; and operates television and digital networks, and post-production facilities. Further, it researches, develops, designs, produces, markets, distributes, sells, and services televisions, and video and sound products; interchangeable lens, compact digital, and consumer and professional video cameras; projectors and medical equipment; mobile phones, tablets, accessories, and applications; and metal oxide semiconductor image sensors, charge-coupled devices, large-scale integration systems, and other semiconductors. Additionally, it offers Internet broadband network services; creates and distributes content for PCs and mobile phones; and provides life and non-life insurance, banking, and other services, as well as batteries, recording media, and storage media products. The company was formerly known as Sony Corporation and changed its name to Sony Group Corporation in April 2021. Sony Group Corporation was incorporated in 1946 and is headquartered in Tokyo, Japan.
Historical performance
Stock information
Market capitalization: $129214529536
P/E ratio: 13.5165
PEG ratio: 1.9414
Dividend yield: 0.0044%
Company summary
Tencent Holdings Limited, an investment holding company, offers value-added services (VAS), online advertising, fintech, and business services in the People's Republic of China and internationally. It operates through VAS, Online Advertising, FinTech and Business Services, and Others segments. The company's consumers business provides communication and services, such as instant messaging and social network; digital content including online games, videos, live streaming, news, music, and literature; fintech services, which includes mobile payment, wealth management, loans, and securities trading; and various tools, such as network security management, browser, navigation, application management, email, etc. Its enterprise business comprises marketing solutions, which offers digital tools including user insight, creative management, placement strategy, and digital assets management; and cloud services, such as cloud computing, big data analytics, artificial intelligence, Internet of Things, security and other technologies for financial services, education, healthcare, retail, industry, transport, energy, and radio & television application. In addition, the company operates innovation business, which includes artificial intelligences; and discover and develops enterprise and next-generation technologies for food production, energy, and water management application. Tencent Holdings Limited was formerly known as Tencent (BVI) Limited and changed its name to Tencent Holding Limited in February 2004. The company was founded in 1998 and is headquartered in Shenzhen, the People's Republic of China.
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Shannon Terrell is a lead writer and spokesperson at NerdWallet and a former editor at Finder, specializing in personal finance. Her writing and analysis on investing and banking has been featured in Bloomberg, Global News, Yahoo Finance, GoBankingRates and Black Enterprise. She holds a bachelor’s degree in communications and English literature from the University of Toronto Mississauga. See full bio
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