K-Wave Media (KWM), the first domestic entertainment company to list on Nasdaq, received a warning from Nasdaq for failing to meet the continued listing requirements.
KWM said it will pursue a recovery in results and improvements to its financial structure by diversifying its business and preserving asset value by holding investment funds in Bitcoin.
According to the entertainment industry on the 20th, KWM received a "notice of deficiency for listing requirements" from Nasdaq on the 7th. KWM's share price stayed below $1 per share on a closing-price basis from Nov. 20 last year to the 6th of this month. To maintain a Nasdaq listing, the closing price of common stock must be at least $1.
KWM is an integrated media holding company formed by an alliance of film and drama production companies, content investment firms, and merchandising companies engaged in the goods business. It was established to overcome structural limits in which production companies, regardless of whether a work is a hit, receive only pre-set production revenue and fees, even as content based on domestic culture is gaining global popularity.
It set a goal of internalizing intellectual property (IP) development, planning, production, and distribution to share profits with creators and investors. It is also exploring expansion into a domestic content investment platform through token issuance (STO).
Unlike last May, when it drew industry attention by listing on Nasdaq, the company's share price has been sluggish. The stock, which was about $2 per share at the time of listing, once rose to around $5 but broke below $4 two months later and plunged to around $1 in August. It rebounded to the $2 range in September–October but fell back below $1 from Nov. 20 and has not recovered to date.
Nasdaq granted KWM a 180-day cure period. KWM must restore the share price to at least $1 for 10 consecutive trading days by July 6 to meet the listing requirements.
Industry watchers analyze that KWM's share price fell because it failed to deliver results during its business restructuring. Play Company, a subsidiary that handled KWM's merchandising business, grew by distributing videos and merchandise for HYBE artists. In 2021 and 2022, HYBE-related sales accounted for more than 80% of the total.
However, as HYBE shifted to carrying out the business in-house, Play Company's HYBE sales share plunged to about 18% in 2024. It is known that there have been no renewals since last year.
KWM said in disclosures to the U.S. Securities and Exchange Commission (SEC) in November last year, "Play Company had faced a client-concentration structure, having been heavily dependent on HYBE, which had been a major client in the merchandising business."
It added, "As the first project for aespa, an artist under SM Entertainment, we recorded sales in Jan. 2025," and "We are focusing on sequentially releasing delayed projects and will recover sales through this."
In December last year, it also moved to diversify its business by taking on investment and distribution for the film "Once We Were Us," starring Koo Kyo-hwan.
At the same time, it is working to improve its financial structure. KWM signed a convertible bond agreement with a global investment firm and is seeking to raise up to $500 million. It also devised a financial strategy to allocate a significant portion of the proceeds to purchasing Bitcoin.
An industry official said, "There is keen interest in the industry as to whether measures such as fundraising or Bitcoin purchases can lead to a recovery in the share price and improved results."
The official added, "The business plans and share-price support measures being considered are also unfamiliar," and "While it could be a strategy to expand capital and develop the business, some say investor sentiment is limited because results are uncertain."