K-Wave Media (KWM), which became 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 diversify its business and preserve asset value by holding investment funds in Bitcoin, among other steps, as it pursues a recovery in results and improvements to its financial structure.
According to the entertainment industry on the 20th, KWM received a "notice of deficiency" from Nasdaq on the 7th. From Nov. 20 last year to the 6th of this month, KWM's closing price stayed below $1 per share. To maintain a Nasdaq listing, a company's common stock must close at a minimum of $1.
KWM is an integrated media holding company formed by a consortium of film and drama production companies, content investment firms, and merchandising companies that operate goods businesses. It was established to overcome structural limits in which production companies, regardless of a work's success, receive only prearranged production revenue and fees, even as content based on domestic culture gains 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 May last year, when it drew industry attention by listing on Nasdaq, the company's stock has been on a weak trend. The stock, which was about $2 per share at listing, once rose to around $5, but two months later broke below $4 and plunged to around $1 in August. It rebounded to the $2 range in September–October, but has fallen back below $1 since Nov. 20 and has yet to recover.
Nasdaq granted KWM a 180-day improvement period. KWM must bring the share price back to at least $1 for 10 consecutive trading days by July 6 to meet the listing requirements.
Industry watchers say KWM failed to deliver results during its business restructuring, leading to a share price decline. Play Company, a subsidiary that handled KWM's merchandising business, grew by distributing videos and merchandise for artists affiliated with HYBE. In 2021 and 2022, HYBE-related sales accounted for more than 80% of the total.
However, after HYBE shifted to carrying out the business in-house, Play Company's share of sales from HYBE plunged to about 18% in 2024. There have reportedly been no contract renewals since last year.
KWM said in a U.S. Securities and Exchange Commission (SEC) filing in November last year that "Play Company had heavily relied on HYBE, a major client in the merchandising business, and faced a client concentration structure."
It added, "As the first project for aespa, artists under SM Entertainment, we recorded sales in January 2025," and "We are focusing on sequentially releasing delayed projects and will recover sales through this."
In December last year, it moved to diversify its business by taking on investment and distribution of the film "Once We Were Us," starring Koo Kyo-hwan.
At the same time, it is also working to improve its financial structure. KWM signed a convertible bond agreement with a global investment firm and is pursuing up to $500 million in funding. It also established a financial strategy to allocate a significant portion of the proceeds to purchasing Bitcoin.
An industry official said, "There is strong interest in the industry in whether the company can achieve a share price recovery and improved results through steps such as fundraising or Bitcoin purchases."
The official added, "The planned businesses and share price support measures are also unfamiliar," and "While it could be a strategy to expand capital and roll out the business, there are views that investment sentiment is limited given the uncertainty of results."