It was a huge success thanks to Kim Ji-won and Kim Soo-hyun… The stock of tears that made ants cry

The Queen of Tears, tvN’s highest ever viewership rating right before our eyes
The stock price of Studio Dragon, which created the drama, has been dropping.

Anal companies say, “Profits are decreasing due to a decrease in the total number of broadcasts.”
“It is difficult to reverse the trend in the second quarter,” recommending a wait-and-see approach.

Even as the drama ‘Queen of Tears’ enjoys the highest popularity with a viewership rating exceeding 20%, the stock price of production company Studio Dragon is booming. This is because the number of episodes aired in the first quarter of the works produced decreased significantly compared to the previous year, leading to a decline in both sales and profits. There are predictions that a decrease in profits is inevitable in the second quarter as the number of programs decreases and the amortization burden increases.

According to the Korea Exchange on the 25th, as of 9:39 am, Studio Dragon is trading at 40,900 won, down 250 won (0.61%) from the previous day. The previous day, trading was completed at a flat price of 41,150 won. It has fallen by about 11% this month alone, and even the 40,000 won level is under threat. The stock price has fallen by more than 20% this year.

This is a different atmosphere from the tvN drama ‘Queen of Tears’ starring actors Kim Ji-won and Kim Soo-hyun, which is enjoying record-breaking box office success.

The Queen of Tears recently recorded a viewership rating of 21.6% (average based on households across the country), which not only broke its own record, but was also a ‘record’ figure among all tvN dramas. While ‘Crash Landing on You’, which ended in February 2020, ranked first in history with 21.7%, it was closely followed by 0.1 percentage points. With two episodes left until the end of the drama, expectations for the highest viewership ratings of all time are high.

However, the stock market is recommending a ‘wait and see mode’ for Studio Dragon, the company that planned and produced this drama.

Hyunji Lee, a researcher at Eugene Investment & Securities, published a report on Studio Dragon and sharply cut the target stock price from 750,000 won to 56,000 won on the grounds that it “lowers performance estimates.”

This researcher predicted that the company’s first quarter sales and operating profit would be 153.9 billion won and 17.4 billion won. This is a decrease of 27.1% and 19.6%, respectively, compared to the same period last year. He said, “Despite the sluggish schedule, the profitability of new games is increasing as sales outlets are diversifying, and global projects are also going well, so profitability is expected to improve compared to the top line.” He also said, “We expect somewhat sluggish performance until the first half of the year.”

However, the second half of the year has a slightly different perspective. He said, “It is expected that performance will recover as the lineup increases, and since most of the original works of ‘Tentpole’ (commercial works expected to be box office hits due to the investment of enormous capital and famous cast members) are scheduled in the second half of the year, a rebound in the industry is expected in the second half of the year.” . As stock prices are expected to fluctuate up and down, the researcher advised that a long-term approach should be taken.

Meanwhile, Eugene Investment & Securities is not the only company with a bleak outlook for this company. Ahead of the announcement of first quarter results, many securities companies, including Shinhan Investment & Securities, NH Investment & Securities, Korea Investment & Securities, Samsung Securities, and KB Securities, lowered their target stock prices this month alone. Among the proposed target prices, the highest is 78,000 won and the lowest is 52,000 won.

Analysts explained that it is not easy to significantly improve performance just because a drama has become a huge hit. Seongman Yoo, a researcher at Leading Investment & Securities, said, “In today’s era where people don’t watch TV much, the cable viewership rating exceeding 20% ​​is actually equivalent to the level of hit dramas in the 40-50% range in the past.” “It’s a situation where we have no choice but to take it down,” he said.

He added, “As the structure is aimed at profitability through a very diverse lineup, the success of one work is good in terms of raising expectations for the next work, but there is a limit to improving performance all at once.” He continued, “As the gap between the current stock price and the previous target price was large, one of the reasons for lowering the target stock price is to reduce this gap.” In other words, the current stock price cannot keep up with the expectations set by existing securities companies, so the securities companies are lowering their target stock prices again. The financial authorities have been operating a discrepancy rate disclosure system since 2017, and analysts are prohibited from suggesting stock prices that are significantly different from the actual stock price.

Shin Min-kyung, Hankyung.com reporter [email protected]