Securities analysts talk about how NewJeans departure would affect HYBE

Securities analysts expect the conflict between ADOR and HYBE to have minimal effect on NewJeans' activities. 

It is also expected that a potential NewJeans' departure from HYBE would not make a significant impact on HYBE's performance.

Ahn Do Young, a researcher at Korea Investment & Securities, explained, "NewJeans has an exclusive contract with ADOR, and since HYBE owns an 80% stake in ADOR, NewJeans remains part of HYBE's intellectual property (IP). Given this, both parties are expected to protect the NewJeans IP, making the upcoming releases in May and June likely to proceed as planned without disruption."

Lee Hwa Jung, from NH Investment & Securities, stated, "HYBE intends to back NewJeans' scheduled activities unless ADOR directs otherwise. With the comeback just a month away, any financial impact from a potential activity halt is expected to be minimal."

Analysts also reassured that even in the worst-case scenario where NewJeans parts ways with HYBE, the adverse effect on HYBE's overall performance would be minor. Park Soo Young, a researcher at Hana Financial Investment, estimated, "The anticipated impact on HYBE's 2024 revenue and operating profit is likely to be less than 10% (if NewJeans left). This trend is expected to continue into 2025." He further noted, "The departure of Min Hee Jin from HYBE seems like a more probable outcome than the worst-case scenario."

They cautioned investors to be wary of increased stock volatility stemming from the audit issue. Oh Ji Woo, a researcher at IBK Investment & Securities, remarked, "Given the ADOR audit issue, increased stock volatility for HYBE is expected in the short term." Ahn Doyoung added, "Considering Min Hee Jin's significant influence, we anticipate short-term stock volatility to rise," suggesting it could be seen as a "buying opportunity" in the future if the stock sees an excessive decline.

SEE ALSO: NewJeans & ADOR fail to reach a settlement during second mediation, court to make its final decision in October