SM Entertainment went public in the early 2000's and is listed on the KOSDAQ as 041510. The stock has split multiple times since its IPO and the stock price has risen exponentially. This has made SM chairman Lee Soo Man a very wealthy man and his stock holdings in the company he founded are worth over $200 million USD. He has a high net worth due to his stock holdings but that can fluctuate depending on the stock price at any given moment. If SM's stock price were to drop 10%? That means he lost over $20 million USD to his net worth (on paper).

As investors eagerly pay attention to news articles for entertainment companies and their artists, it is said that entertainment labels are especially sensitive towards any negative news and rumors about their artists. It is because artists are considered as 'Public Persons' in Korean society and their image and reputation can directly impact company income. A big scandal happens and suddenly a lucrative concert tour has to be canceled? There goes a big chunk of projected revenue for the quarter, the company cannot meet investors expectations and the stock price plummets.

SEE ALSO: SM Entertainment posts record high earnings in 2015's third quarter

Below is the stock trend chart of the company with the largest market capitalization from the "Big 3," SM Entertainment. The stock chart date range is from January 1, 2015 to the present. You will see how good news (Marked in red: comebacks, strong Quarter results, etc.) along with bad news (Marked in blue: rumors, disappointing Quarter results, member departures, etc.) are impacting SM's stock price.

Chart Source: PAXNet

As you can see, negative news usually results in the stock price to dip while positive news usually results in the stock price to increase. One year ago, if you were thinking about investing in a Korean entertainment company, SM Entertainment would've been a very wise choice. Just one year ago, the stock price was hovering around 29,000 KRW (~ $24) and as of November 13, SM's stock price closed at 44,850 KRW (~ $38). Your investment would have increased by more than 50%. 

With a record breaking third quarter along with SM Entertainment's plan to establish a Joint Venture company in China before the end of the year, SM Entertainment can look towards an increasing bullish outlook.