The decline in YG Entertainment's stock price was triggered by reports that both the artist G-Dragon and the company's executive producer, Yang Hyun-suk, are being investigated by police for alleged copyright infringement. Prior to this, the company had been experiencing a positive trend, with six consecutive days of stock gains, fueled by impressive second-quarter earnings. This suggests that the controversy has negatively impacted investor confidence.
At 9:22 a.m. on the 13th, YG Entertainment's stock was valued at ₩97,200, reflecting a decrease of ₩4,900 or 4.80% from the previous day. Initially starting the day at ₩102,000, the stock reached a low point of ₩97,100, representing a 4.89% decline. This indicates a loss of investor confidence possibly linked to the ongoing investigation.
This downturn in stock value stands in stark contrast to the company's recent financial success. On August 8, YG Entertainment announced a return to profitability in the second quarter, reporting consolidated revenue of ₩100.4 billion and operating profit of ₩8.4 billion. The net income also became positive, reaching ₩11.2 billion compared to the previous year. These strong financial results led to the stock reaching a 52-week high of ₩104,900 on August 12, showcasing the volatility introduced by the legal issues.
The investigation was initiated by the Mapo Police Station in Seoul following a complaint filed in November of the previous year by a composer identified as A. The composer accused G-Dragon and Yang Hyun-suk of breaching copyright laws by allegedly reproducing and distributing his work as part of an album without authorization. This implies serious legal challenges for the company and its executives.
In response to the allegations, YG Entertainment has firmly denied any wrongdoing. According to a statement quoted by Ilgan Sports, a company representative explained that the situation arose from a 2009 solo concert, where two songs with identical titles were erroneously listed in the setlist. They emphasized that this is not a matter of unauthorized album reproduction, attempting to clarify the nature of the misunderstanding.
As part of the investigation, the police have reportedly interviewed involved individuals and conducted two searches at YG Entertainment’s headquarters. This indicates that the authorities are taking the matter seriously and are thoroughly examining the evidence related to the allegations.