Big Hit Entertainment, which was one of the most anticipated IPO's in Korean stock market history and has been widely expected to be considered an IPO giant in the second half of 2020, has lost some face after a steep decline in the stock price.
Stock prices plunged more than 20 percent on the second day of trading after falling 4.44 percent on the first day of listing. With stock prices falling vertically, the average loss rate of individual investors who bought into Big Hit amounts to 24 percent for two days.
On Wednesday, Big Hit closed at 200,500 KRW (~176 USD), down 22.29 percent from the previous trading day. Big Hit, which had a shaky start on October 16, struggled during the day and managed to stay above the 200,000 KRW mark. In just two days, the value declined 150,000 KRW from the highest price (351,000 KRW). The daily trading volume and transaction amounts were about 4.4 million shares and 950 billion KRW (831.8 Million USD), respectively.
As stock prices have fallen into a slump, individual investors who bet on further gains are increasingly worried after seeing the precedent set by the IPO's of SK Biopharm and Kakao Games. According to the financial investment industry, individual investors' average purchase price was 263,804 KRW (~231 USD) for two days. Based on the day's closing price, the average weekly loss rate and loss amount of the assessment was 24.00% and 63,304 KRW (55.6 USD) per share, respectively. The average purchase price of individual investors who bought Big Hit stocks on the previous day was 296,413 KRW (~259 USD), with a loss rate of 32.36 percent (95,913 KRW/~84 USD) based on the closing price.
With Big Hit's stock prices steep decline over the first days of trading, amateur investors who thought they were going to make big money lamented in online stock communities.
On the same day, an investor who is believed to have invested in Big Hit after watching SK Biopharm and Kakao Games hit the upper limit after their respective IPO's, posted on an online community, "Is it possible to get a refund on Big Hit stocks?" Another investor stated it was his first time buying stocks and invested in Big Hit Entertainment with his wedding funds. He wrote, "It hasn't been 24 hours yet, but wouldn't it be possible to get a refund if I prove my first purchase and submit a petition?"
Other investors posted other excuses and requests for a refund. Some posted questions such as "Can I submit a complaint to the UN if I don't get a refund?", "My cat accidentally pressed the purchase button, would I be able to get my refund?", and "I heard if you write an apology letter, you can get a refund."
It seems that many amateur or first-time investors invested in Big Hit on the first day the company went public. As the stock prices for Big Hit has plunged by 22.29% on the second day, many rookie investors are getting anxious due to the loss of the value of their stocks.
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This will be a REAL shock for first time investors. Investing in the Stock market is a risky business if you don't know what you're going in to. And it depends on the strength of the Company you're investing in. It is typical that IPO are bought with high value but when it is out in the market it can go down 20-30%. Because when it is out, it is a bully market. Buyers try to push the price down, and the Sellers - afraid to loose their money, they will sell it at a low price. Then when the price goes up again, then the buyer will sell the stocks he bought on a low price - to a high price, that's where they make their profit. People see a lot of these fluctuations from time. But this also depends on how the Company is doing business. With Big Hit, they have a good Business Strategic Plan & they were really doing very well without the IPO for so many years now. But since they want to expand more that's why they went on IPO. Their marketing strategy is very good and the group of idols are expanding.
With BTS with a possibility of delaying their military enlistment in the next two years & a lot of group idols activities, I can say BH will still be going strong.
In the Stock market, Companies usually held General meetings yearly with the investors to update them of the business status of the company. Within a one year timeframe, if the company earns a certain amount of $Billion Won, a percentage of a dividend will be given to the investors. So I can say the earnings only can be known after a one year frame. It's like a Savings. And it depends on the number of share/stocks the investor bought from the company.
I've been a Stockholder in the International Share Market for almost 20 years. It's like a "savings & forget it" situation for me. Though, I keep track of the status of the company. And yearly I collect dividends from the investments I made. It helped me that mostly the money I spent on the family holiday comes from the profit of the stock market.
If I can, I would like to invest in BH Entertainment.
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