Netmarble Locked at 360,000 Won... Suffering from HYBE Share Price Decline

Netmarble’s Profit Return Swap (PRS) contract, which utilized the company’s stake in HYBE, has recently resulted in a significant valuation loss due to the sharp decline in HYBE’s stock price. While the contract previously brought in settlement profits during the period of rising share prices, a new PRS contract signed earlier this year at a high base price has become a financial burden as HYBE’s share price has stalled.

Netmarble Headquarters in Guro-gu, Seoul. Photo by Jinhyung Kang aymsdream@

According to the Financial Supervisory Service’s Electronic Disclosure System on October 7, Netmarble disposed of 880,000 shares of HYBE in February 2026 through a PRS transaction at a base price of 364,500 won per share, totaling approximately 320.7 billion won. In a PRS, an asset is sold to another party, and at the time of settlement, if the stock price rises above the base price, the seller claims the profit, whereas if it falls below, the seller must compensate the loss—essentially, a type of derivative transaction. Netmarble used its HYBE shares to secure financial liquidity.

However, following the contract, HYBE’s stock price sunk to the 150,000 won level, causing Netmarble’s valuation loss to grow substantially. In its first-half semiannual report for 2026, Netmarble reported a 141.6 billion won valuation loss on derivatives. The primary reason for this is the PRS valuation loss resulting from HYBE’s declining stock price. Considering further stock price volatility in the second half, the total compensation Netmarble will need to pay the counterparty at the time of settlement is estimated to exceed 180 billion won at current price levels. The PRS contract is classified as a derivative liability, so stock price declines result in on-book valuation losses, recorded as non-operating losses that directly impact net profit.

Previously, in May 2024, Netmarble also disposed of 1.1 million HYBE shares via PRS at 199,900 won per share. After that contract, a subsequent rise in HYBE’s stock price generated additional settlement profits and contributed to improved net earnings—a scenario in stark contrast to this year. Due to these consecutive stock sales, Netmarble’s current stake in HYBE is approximately 7.09%. Recently, as the National Pension Service disclosed a reduction in its HYBE stake to 6.77%, Netmarble regained its status as the second-largest shareholder of HYBE.

Amidst this derivative risk, securities firms have recently lowered their target prices for Netmarble, forecasting disappointing results for the third quarter of 2026. With performance adjustments unavoidable due to sluggish performance of new games launched earlier in the year—such as 'The Seven Deadly Sins: Origin' and 'MonGil: Star Dive'—as well as currency depreciation, accumulated valuation losses related to HYBE in the non-operating segment are adding to the company’s performance burden.

Hyojin Lee, a researcher at Meritz Securities, stated, "In the third quarter, the valuation loss from HYBE’s share price decline will be more significant in the non-operating segment than foreign exchange losses. With weakening market confidence in new releases compounded by HYBE’s falling share price, the pressure on both earnings momentum and asset value has increased." Lee also pointed out that this is not merely an on-book loss: there is now a risk of cash outflows amounting to several hundred billion won at the time of settlement, which further weighs on the company’s valuation.

This content was produced with the assistance of AI translation services.