The South Korean romantic series “Queen of Tears” on tvN has achieved viewer ratings in the 20% range, driven by strong performances from actors Kim Soo-hyun and Kim Ji-won. Despite this success, the stock price of the drama’s production company, Studio Dragon, has been on a continuous decline.
According to Nielsen Korea, the ratings for episode 12 of the series, which aired on April 14, were 20.7%, making it the second-highest rating among tvN dramas.
But the production company’s stock price on April 16 hit an all-time low of 39,900 won, nearly halving from a year ago on April 25, when it stood at 72,400 won.
Studio Dragon’s stock has shown a consistent decline this month, diverging from previous patterns where the company’s stock price rose along with the ratings for TV series like “Extraordinary Attorney Woo” and “Reborn Rich.”
The decline is attributed to expected revenue drops for the first half of the year. Studio Dragon’s revenue primarily comes from content sales and scheduling, with most of its produced content scheduled for release in the second half of the year. Since content sales and scheduling revenue coincide with content delivery, the number of broadcasts is directly linked to revenue.
As a result, securities companies on April 15 lowered their target price for Studio Dragon. Korea Investment & Securities reduced it from 63,000 won to 56,000 won, and Samsung Securities from 68,000 won to 55,000 won.
Studio Dragon aired 64 episodes of its works in the first quarter, significantly fewer than the 112 episodes during the same period last year. Experts predict it will be challenging to achieve good results in the second quarter as well due to fewer TV channel airings and high amortization costs of “Queen of Tears” relative to sales.
Investment opinions remain a “buy” based on the outlook for improvement in profit margins this year. “As we move into the fourth quarter, the number of episodes will increase, including originals for online streaming services (OTT),” said Ahn Do-young, a Korea Investment & Securities researcher. “The direction of improving the profitability of individual projects by expanding the proportion of in-house planning and considering sales through OTT platforms is positive.”
A Samsung Securities researcher, Choi Min-ha, said, “Studio Dragon is a production company with the foundational strength to withstand economic downturns,” adding, “A gradual improvement in business conditions and expansion of content supply channels will enhance performance, necessitating a long-term approach.”
This article was originally published on April 16, 2024.
