SEOUL--Big Hit Entertainment, the management label of South Korean superstar K-pop group BTS, hit the stock market with a 9.6 trillion won ($8.38 billion) valuation on Thursday before worries over its narrow revenue stream pulled shares below the debut price.

Big Hit, which relies heavily on the boy band for revenue, opened at 270,000 won--double its initial public offering (IPO) price--and surged by as much as 30 percent in early trade before dropping back to just under the list price.

Interest in South Korea’s third largest IPO of the year was high, with almost half of Big Hit’s 10 million tradable shares changing hands on Thursday morning amid a weaker wider market, according to the Korea Exchange website.

Analysts say the company has proved itself online savvy, using Youtube and social media for market infiltration since in-person performances were canceled because of the coronavirus pandemic.

But there are some concerns about Big Hit’s reliance on its star artists. The Billboard Chart-topping BTS, which has a huge global following, accounted for 87.7 percent of the label’s revenue in the first half of 2020, according to a regulatory filing.

It’s a scenario common among South Korean entertainment companies and one investors are familiar with, but it makes revenue especially vulnerable to any disruptions in output from key talent.

“The industry is booming, but it’s also very cyclical, and undergoes a lot of fluctuations,” said Kim Hyun-yong, analyst at Hyundai Motor Securities, citing potential obstacles such as the country’s mandatory military service.

That service is looming for BTS, with the eldest member of the band currently required to sign up by the end of next year and the remaining six members over the following five years.

Calls have been mounting for the band to be granted an exemption from or postponement of the two-year commitment, with some lawmakers and fans arguing they are doing plenty for their country without wearing a soldier’s uniform.

Earlier this week, BTS faced a barrage of criticism in China after the band’s lead member made remarks about the 1950-53 Korean War pitting the United States and South Korea against China and North Korea. BTS-related social media posts relating to big-name brands, including Samsung, FILA and Hyundai, subsequently disappeared from Chinese e-commerce platforms.

Thursday’s float made the band members instant multimillionaires, with each granted shares worth 18.5 billion won at the debut price, but BTS’ official Twitter account did not reference the listing, focusing instead on the group’s win at the coinciding U.S. Billboard Music Awards for Top Social Artist.

NEW ARTISTS?

Analysts said BTS’ successful online concerts have partly made up for performances canceled due to COVID-19. Additionally, Big Hit’s unprecedented level of control over its revenue streams via its Weverse fandom platform that distributes BTS content and sells merchandise, differentiate the label.

“Although offline concerts are impossible for the time being, Big Hit’s results in the first half of this year show that the content and merchandise made profits; it was hardly affected on-year,” said KTB Investment & Securities analyst Nam Hyo-ji.

Big Hit founder and co-CEO Bang Si-hyuk said the company planned to create “new value chains.”

“We will continue to research, challenge, discover innovative business models, and apply them to continue to grow in the global market,” he said at the listing ceremony.

The listing added to heightened IPO activity in South Korea, with volumes rising 51 percent to $2.9 billion so far this year, compared with the same period last year, according to Refinitiv data.

The pipeline looks solid after government stimulus to boost the economy amid the coronavirus pandemic flooded markets with cash, analysts said. Online game developer Krafton, and chat app operator Kakao’s mobile banking unit KakaoBank have both begun preliminary processes for listing.