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    Eli Lilly’s weight loss drug Zepbound shows promise as a sleep apnea treatment in late-stage trials

    Eli Lilly said its highly popular weight loss drug Zepbound showed the potential to treat patients with the most common sleep-related breathing disorder in two late-stage clinical trials.
    Zepbound was more effective than a placebo at reducing the severity of obstructive sleep apnea in patients with obesity after a year.
    The pharmaceutical giant said it plans to present the preliminary trial data at an upcoming medical conference and submit it to the Food and Drug Administration and regulators in other countries in mid-2024. 

    An injection pen of Zepbound, Eli Lilly’s weight loss drug, is displayed in New York City, U.S., December 11, 2023. 
    Brendan McDermid | Reuters

    Eli Lilly on Wednesday said its highly popular weight loss drug Zepbound showed the potential to treat patients with the most common sleep-related breathing disorder in two late-stage clinical trials.
    The initial results add to the long list of potential health benefits of weight loss and diabetes treatments, which have skyrocketed in demand over the last year despite their high prices and spotty insurance coverage.

    Zepbound was more effective than a placebo at reducing the severity of obstructive sleep apnea, or OSA, in patients with obesity after a year, according to preliminary data from both trials. OSA refers to interrupted breathing during sleep due to narrowed or blocked airways. The pharmaceutical giant said it plans to present the results at an upcoming medical conference and submit them to the Food and Drug Administration and regulators in other countries in mid-2024.
    Eli Lilly previously announced that the FDA granted Zepbound “fast track designation” for patients with moderate-to-severe OSA and obesity. That designation ensures that drugs that intend to both treat a serious or life-threatening condition and fill an unmet medical need get reviewed more quickly.
    The results are an early sign of hope for the estimated 80 million patients in the U.S. who experience OSA, Eli Lilly said in a press release. Around 20 million of those people have moderate-to-severe forms of the disease, but 85% of OSA cases go undiagnosed, according to Eli Lilly.
    OSA can lead to excessive daytime sleepiness and loud snoring, as well as contribute to serious complications, including hypertension, stroke and heart failure. Patients with the condition have limited treatment options outside of cumbersome and often uncomfortable machines that provide positive airway pressure, or PAP, to allow for normal breathing.
    “Addressing this unmet need head-on is critical, and while there are pharmaceutical treatments for the excessive sleepiness associated with OSA, [Zepbound] has the potential to be the first pharmaceutical treatment for the underlying disease,” Dr. Jeff Emmick, Eli Lilly’s senior vice president of product development, said in the release on Wednesday.

    Zepbound has slipped into shortages since receiving approval in the U.S. for weight management in November. The active ingredient in Zepbound, known as tirzepatide, is also approved under the brand name Mounjaro for diabetes.
    Mounjaro and other diabetes drugs are typically covered by insurance, while Zepbound and other weight loss drugs are not. But the new data in sleep apnea patients gives Eli Lilly a “pathway to gaining Medicare Part D coverage for Zepbound,” even before any changes to the federal program’s coverage of obesity treatments, JPMorgan Chase analyst Chris Schott wrote in a note Wednesday.
    Under new guidance issued in late March, Medicare can cover certain weight loss drugs as long as they receive FDA approval for an added health benefit. Medicare prescription drug plans administered by private insurers, known as Part D, currently cannot cover those drugs for weight loss alone.
    Schott added that the new data gives Eli Lilly a path to increase the use of Zepbound among men. He said the company has suggested that men may be more likely to use a so-called GLP-1 drug such as Zepbound for sleep apnea compared to obesity.
    Eli Lilly’s Zepbound works by imitating two naturally produced gut hormones called GLP-1 and GIP. GLP helps reduce food intake and appetite. GIP, which also suppresses appetite, may also improve how the body breaks down sugar and fat.

    Initial trial results

    The two phase-three trials, both called SURMOUNT-OSA, tested Zepbound in two groups of patients. Notably, 70% of participants across the studies were men, Eli Lilly said in its release.
    Researchers specifically examined how much the weekly injection reduced the so-called apnea-hypopnea index, or AHI, which records the number of times per hour a person’s breathing shows a restricted or completely blocked airway. The index is used to evaluate the severity of obstructive sleep apnea and the effectiveness of treatments for the condition. 
    In both sub-studies, Zepbound was superior to the placebo in reducing AHI, which was the main goal of the trials.

    Cherrybeans | Istock | Getty Images

    The first study evaluated the drug in adults with moderate-to-severe obstructive sleep apnea and obesity who were not on PAP therapy.
    People who took Zepbound had an average of 27.4 fewer AHI events per hour at 52 weeks, compared with an average reduction of 4.8 events per hour for the placebo, according to the results. 
    Zepbound also met the trial’s second goal, leading to an overall AHI reduction of 55% compared with a decrease of 5% for the placebo, the results say.
    The second study tested Zepbound in adults with the same conditions, but those patients were on and planned on continuing PAP therapy.
    People who took Zepbound had an average of 30.4 fewer AHI events per hour at 52 weeks, compared with an average reduction of 6 events per hour for the placebo. 
    Zepbound led to an overall AHI reduction of nearly 63%, compared with a decrease of more than 6% for the placebo.
    The results blew past Wall Street’s expectations. Investors largely deemed a 50% reduction as the threshold to consider Eli Lilly’s trials a success. The roughly 60% improvement shows “outsized benefits,” Deutsche Bank analyst James Shin wrote in a note Wednesday.
    Across the two studies, Zepbound helped patients lose around 20% of their weight. But Eli Lilly noted that men are known to achieve less weight loss than women with therapies like Zepbound.
    In a note on Wednesday, Morgan Stanley analyst Terence Flynn called that weight reduction encouraging and said the firm expected 15% to 18% weight loss in the trial. Morgan Stanley views “this as another positive data point supporting the efficacy profile of tirzepatide,” Flynn said. More

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    Boeing faces scrutiny in Senate hearings over aircraft safety and quality

    A Boeing whistleblower, who alleged that the manufacturer cut corners on its 787s and 777s, is testifying.
    Boeing has denied the whistleblower’s allegations, calling them “inaccurate.”
    The company is under fire after a door plug panel blew out of an Alaska Airlines 737 Max 9 in January.

    US Senator Richard Blumenthal (L) greets Boeing engineer Sam Salehpour as he arrives to testify before the US Senate Homeland Security and Governmental Affairs Subcommittee on Investigations during a hearing on “Examining Boeing’s Broken Safety Culture: Firsthand Accounts,” at Capitol Hill in Washington, DC, on April 17, 2024. 
    Drew Angerer | Afp | Getty Images

    Boeing’s safety and quality were under fire again in two Senate hearings Wednesday as the manufacturer faces mounting scrutiny after a midair door blowout and near catastrophe on one of its planes in January.
    A Boeing engineer-turned-whistleblower testified before a Senate panel, reiterating his allegations that the plane maker cut corners to move wide-body jets through the production line, despite flaws. Sam Salehpour alleged that the company failed to adequately shim tiny gaps at meeting points on the 787 Dreamliner’s fuselage, and that that could “ultimately cause a premature fatigue failure without any warning,” according to his testimony. A shim is a thin piece of material used to fill tiny gaps.

    “I believe that Boeing can do better and that the public’s trust in Boeing can be restored,” he said in prepared remarks to a subcommittee of the Senate Homeland Security Committee ahead of the hearing “Examining Boeing’s Broken Safety Culture: Firsthand Accounts.”
    Boeing has denied the allegations, calling them inaccurate, and has defended the aircraft and its testing. On Monday, it gave reporters a roughly two-hour briefing about what it described as exhaustive fatigue testing on the 787 and 777 aircraft, saying it did not find safety risks.
    Scott Kirby, CEO of United Airlines, a major Dreamliner operator, brushed off concerns about the plane on Wednesday.
    “I am totally confident that the 787 is a safe airplane,” he told CNBC’s “Squawk Box.”
    Still, the Jan. 5 blowout of a door panel on a Boeing 737 Max 9 plane when an Alaska Airlines flight was at 16,000 feet has again thrust Boeing’s safety culture into the spotlight and caused a crisis at the manufacturer. New plane deliveries from Boeing have slowed as the Federal Aviation Administration ramps up its scrutiny of the company’s production lines.

    Boeing’s CEO, Dave Calhoun, last month said he would step down by year’s end, while the company replaced its head of its commercial airplane unit and its board chair.
    A separate hearing, by the Senate Commerce Committee on Wednesday, addressed Boeing’s safety culture after a report issued earlier this year from an expert panel ordered by Congress found a “disconnect” between Boeing’s senior management and other members of the organization on safety culture.

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    Most doses of Eli Lilly’s Zepbound, Mounjaro in short supply through June, FDA says 

    Most doses of Eli Lilly’s highly popular weight loss drug Zepbound and diabetes counterpart Mounjaro will be in short supply through the second quarter of this year due to increased demand, according to an update on the Food and Drug Administration’s drug shortage database.
    A previous update said some doses of both treatments would have limited availability through April.
    The new update suggests that the insatiable demand for a buzzy class of weight loss and diabetes drugs is still trouncing supply, even as Eli Lilly and Novo Nordisk work to increase production of those treatments. 

    An injection pen of Zepbound, Eli Lilly’s weight loss drug, is displayed in New York City, U.S., December 11, 2023. 
    Brendan McDermid | Reuters

    Most doses of Eli Lilly’s highly popular weight loss drug Zepbound and diabetes counterpart Mounjaro will be in short supply through the second quarter of this year as demand jumps, according to an update on the Food and Drug Administration’s drug shortage database on Wednesday. 
    All doses of Zepbound and Mounjaro besides the 2.5-milligram versions of both treatments are in a shortage. A previous update said some doses of both drugs would have limited availability through April.

    The new update suggests that the insatiable demand for a buzzy class of weight loss and diabetes drugs is still trouncing supply, even as Eli Lilly and its main rival, Novo Nordisk, work to increase production of those treatments. 
    Many patients are struggling to find the injectable treatments, which have soared in demand for helping them shed significant pounds over time. Those treatments are sometimes known as incretin drugs, which mimic gut hormones to suppress appetite and regulate blood sugar.
    “We recognize this situation may cause a disruption in peoples’ treatment regimens and areworking with purpose and urgency to help meet the surge in demand,” an Eli Lilly spokesperson said in a statement to CNBC. The company expects its investments in manufacturing and supply capacity “to progressively increase production of our medicines throughout 2024 and beyond,” they added.

    More CNBC health coverage

    Eli Lilly in February said it has achieved its goal of doubling production capacity for such incretin drugs by the end of 2023. The company said it will expand production with “equal urgency” this year, with the most significant increases occurring in the second half of the year. 
    By that point in the year, the company expects its production of sellable doses of incretin drugs to be at least 1.5 times higher than it was in the second half of 2023.

    Eli Lilly has also said that a new plant in Concord, North Carolina, will start production of incretin drugs as early as the end of the year, with products available to ship in 2025. The company also will build a handful of other facilities over the next few years, including a site in Germany and two new plants in its home state of Indiana. 
    Novo Nordisk has announced similar efforts. Some doses of its weight loss drug Wegovy and diabetes counterpart Ozempic are also in short supply, according to the FDA’s website.

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    Comcast launches prepaid and month-to-month internet and phone plans

    Comcast is launching a prepaid and month-to-month internet and phone plan program called NOW.
    The plans are aimed at being low in cost, coming in at between $20 per month and $45 per month, depending on the package.
    The NOW program supplements Comcast’s long-standing low-income internet option, called Internet Essentials.

    Mateusz Slodkowski | Lightrocket | Getty Images

    Comcast announced Wednesday that it is launching a prepaid and month-to-month low-cost internet and phone plan program called NOW.
    The new plan is designed to be simple for customers to opt into or cancel at any time using Xfinity and unlimited 5G. Comcast said NOW offers more flexibility than fixed wireless options at a low cost.

    The program includes four different offerings:

    NOW Internet, where customers choose between 100 megabits per second, or Mbps, for $30 per month, or 200 Mbps for $45 per month, both including unlimited data.
    NOW Mobile, with unlimited data for talking and texting at $25 per line.
    NOW TV, which offers Xfinity internet customers on-demand and live streaming from more than 40 networks for $20 per month.
    NOW WiFi Pass, providing unlimited access to Xfinity hotspots for $20 for 30 days.

    “Consumers have told us they want low-cost, easy-to-use connectivity and entertainment options that deliver the same reliability and consistency of our leading Xfinity Dave Watson, president and CEO of connectivity and platforms at Comcast, said in a statement. “With NOW, we’ve developed a new product construct from the ground up to be simple and easy for anybody who wants Internet, mobile or TV on their own terms without sacrificing quality.”
    The NOW program supplements Comcast’s long-standing low-income internet option, called Internet Essentials, which packages 50 Mbps for $9.95 per month. The company has already tested NOW across a few American cities and expects a full-scale national rollout in the coming weeks, it added. NOW TV and NOW WiFi Pass are available immediately.
    Comcast has been experiencing a lack of broadband growth over the past year, reporting net broadband losses in multiple quarters. The company has indicated that it plans to change that, with Watson adding on an October company earnings call that it is “a pretty competitive environment.”
    Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.

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    Even without war in the Gulf, pricier petrol is here to stay

    When Iran’s missiles whizzed towards Israel on Sunday April 14th, oil markets were closed. When they opened 24 hours later, their reaction was a loud “meh”. Brent crude, the global benchmark, dipped below $90 a barrel. It has since hovered around that level (see chart).Chart: The EconomistTraders had expected an attack of precisely this variety: big enough to cause concern; obvious enough to be foiled. They are now betting that Israel will avoid anything too rash in response. Yet even if oil prices do not surge, they remain uncomfortably elevated and seem likely to rise higher still in the summer, when increasing demand amid tight supply will probably tip the market into deficit. A cast of decision-makers—from central bankers to President Joe Biden, who faces re-election in November—is watching anxiously.Geopolitical risk explains, in part, why oil prices have risen by a quarter since December. Brent passed $90 for the first time in nearly six months after Israel bombed Iran’s consulate in Damascus on April 1st. Supply disruptions are playing an even bigger role. Mexico is slashing shipments in order to produce more petrol at home. A leaky Scottish pipeline was forced to close. Turmoil in Libya is disrupting output; war in South Sudan could do the same.Meanwhile, tougher sanctions on Russia are leaving more of its oil stranded. In March refiners in India—Russia’s second-biggest buyer since 2022—said they would no longer welcome tankers owned by Sovcomflot, Russia’s state-owned shipping firm, for fear of Western retribution. Most of the 40-odd tankers subject to sanctions by America since October have not gone on to load Russian oil. The reimposition of sanctions on Venezuela could further dent supply. America may also decide to better police its existing embargo on Iran’s oil sales.The biggest supply disruption is deliberate. It is coming from the Organisation of the Petroleum Exporting Countries and its allies (OPEC+). In November the group pledged to slash output by 2.2m barrels a day (b/d), or 2% of global production. Most observers had expected that, with prices likely to rise throughout 2024, members would take the chance to row back on the cuts. Instead, several announced in March that they would extend them until the end of June. Russia even said it would deepen its cuts by another 471,000 b/d, reducing output to 9m b/d, from 10.8m b/d pre-war.Chart: The EconomistLast year supply growth outside the cartel more than made up for the rise in demand. This year non-OPEC output will rise again—Brazil and Guyana are expected to pump record amounts—but growth will slow. Global oil stocks are already falling; they will shrink faster this summer, as holidaymakers in America take to the road.All this is happening in the face of robust demand. Measures of manufacturing activity in America, China and Europe have surprised on the upside, leading the International Energy Agency, an official forecaster, to predict that global crude demand will rise by an average of 1.2m b/d this year, up from the 900,000 b/d it suggested in October. Others, including some big traders and OPEC itself, reckon demand growth may near or surpass 2m b/d.Where will the oil price go next? If OPEC+ keeps its cuts unchanged, it could reach $100 within months. But that is not an outcome the cartel really wants. Many members, not least Saudi Arabia, worry that a rapid rise in the oil price could destroy demand. Dearer crude is pushing American petrol prices, already at $3.60 a gallon, closer to $4. A surge past that point could shave 200,000 b/d off petrol demand over the summer, estimates JPMorgan Chase, a bank. Thus OPEC+ may signal its intention to produce more at its next meeting. Jorge León, a former OPEC analyst now at Rystad Energy, a consultancy, expects crude to average $90 a barrel in the third quarter of the year and $89 in the final quarter. Futures markets are even more sanguine: buying crude for delivery in December costs around $85 a barrel.Black cloudEven if the tit-for-tat between Israel and Iran escalates, it is unlikely to change much. Any reduction in Iran’s exports—worth 1.6m b/d in March—might be balanced by more pumping from the rest of OPEC. In a worst-case scenario, Iran could decide to close the Strait of Hormuz, a waterway that connects the Gulf to the Indian Ocean, through which 30% of the world’s seaborne oil, and nearly all of the Gulf’s, must pass. Doing so would anger just about everyone in the region, and cut off Iran from its sole oil buyer: China. Perhaps Iran would opt to cause trouble in less self-harming ways, such as harassing ships in the Gulf. Yet even the “tanker war” of the 1980s—when hundreds of tankers were attacked—failed to durably boost prices.The most likely scenario, therefore, is that oil prices remain tolerable to the world economy, at somewhere in the region of $85-90 a barrel, while allowing OPEC members to earn juicy margins. Prices are unlikely to fall soon, though. And whether such a level is tolerable to American voters, who see gasoline prices advertised in big red numbers by the highway every day, is another matter entirely. ■ More

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    Superyacht sales plunge as wait times rise, Russian oligarchs drop out of the market

    Sales of superyachts took a dive in 2023, as long waiting lists, soaring costs and Russian oligarch sanctions hit demand.
    A buyer placing an order for a new yacht over 200 feet today faces wait times of three to four years due to backlogs stemming from the pandemic.
    The largest superyachts took the biggest hit, with sales of vessels over 200 meters, or roughly 650 feet, falling 40%.

    A water slide on Savannah, a 274-foot hybrid superyacht.
    Courtesy of Northrup & Johnson

    A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.
    Superyachts sales took a dive in 2023, as long waiting lists, soaring costs and oligarch sanctions hit demand, according to a new report.

    Sales of new superyachts (yachts over 100 feet long) fell 17% last year, according to the new SuperYacht Times’ State of Yachting report. There were 203 sales of new superyachts in 2023, down from 245 in 2022 and down from the record 313 in 2021.
    Ralph Dazert, head of intelligence at SuperYacht Times, said a buyer placing an order for a new yacht over 200 feet today faces wait times of three to four years due to backlogs stemming from the pandemic. Prices are also soaring due to higher labor and material costs.
    Dazert said he expects new superyacht sales to “go down a little bit further this year” given the continued costs and delays.

    The largest superyachts took the biggest hit, with sales of yachts over 200 meters, or roughly 650 feet, falling 40%. The main reason for the large superyacht drop is due to the fact that rich buyers from Russia are dropping out of the market following the Ukraine invasion by the country in 2022, according to the report.
    “The Russians were prone to ordering very extravagant and very large yachts,” he said.

    Americans are picking up some of the slack, accounting for nearly a quarter of all superyacht sales last year. And while Americans tend to build smaller yachts compared to Middle Eastern and Russian buyers, the American boats are getting larger.
    The average length of a Saudi-owned superyacht is 202 feet, compared to 200 feet for Russian buyers and 177 feet for the Americans, according to the report.
    Even as new sales declined, yacht completions were up. That data represents yachts ordered during the frenzy of the pandemic that are just now being launched. The number of completions surged 31% in 2023 to 202 superyachts.
    The rising fleet of superyachts translates into a growing demand for the entire ecosystem of the yacht economy — from builders and brokers to marina slips and crew. There are now nearly 6,000 superyachts, triple the number in 2002, according to SuperYacht Times.
    Dazert said the flood of wealthy buyers who came into the market for the first time during Covid continue to use their yachts. Many are upgrading, which means the high-water mark for the yachting economy will likely keep rising.
    “The pool of customers has expanded permanently,” he said.
    Sign up to receive future editions of CNBC’s Inside Wealth newsletter with Robert Frank.

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    Regional bank earnings may expose critical weaknesses, former FDIC Chair Sheila Bair warns

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    Regional bank earnings may expose critical weaknesses, according to Sheila Bair, former chair of the U.S. Federal Deposit Insurance Corp.
    Their quarterly numbers begin hitting Wall Street this week.

    “I’m worried about a handful of them,” Bair told CNBC’s “Fast Money” on Tuesday. “I think some of them are still overly reliant on industry deposits, have a lot of concentrated commercial real estate exposure, and then I think the larger picture really is the potential instability of their uninsured deposits even for the healthy ones if we have another bank failure.”
    Bair, who ran the FDIC during the 2008 financial crisis, is nervous that regional bank issues from 2023 aren’t fully resolved.
    “Congress should reinstate the FDIC’s transaction account guarantee authority so that they can stabilize those deposits,” she said. “This is still a problem for the regional banks, and fingers crossed that there’s [not] another failure. We’re just not quite sure what’s going to happen.”
    Regional banks are having a tough year so far. The SPDR S&P Regional Bank ETF (KRE) is down almost 13%, and only four of its members are positive for 2024.
    The biggest laggard in the KRE is New York Community Bancorp which has tumbled more than 71% this year. Metropolitan Bank Holding Corp., Kearny Financial, Columbia Banking System and Valley National Bancorp are down more than 30% in that time period.

    “The big issue is whether there is another shock to uninsured deposits because of a bank failure, and I think that is really the biggest challenge confronting regional banks right now,” she said.
    Her latest regional bank warning comes as the benchmark 10-year Treasury note yield topped 4.6% this week and hit its highest level since November 2023.
    Bair is concerned higher yields could put more stress on commercial real estate borrowers, and regional banks have a lot of exposure.
    “Part of the problem in commercial real estate is that a lot of it is refinancing this year and next,” said Bair. “So, the higher the rates go for those refinancings, the more distress there will be with borrowers to be able to continue with their payments.”
    However, regional banks’ issues could bring more business to larger institutions.
    “Regional bank distress benefits the big money-center banks. There’s no doubt in my mind,” Bair said.
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    K-pop stocks have sold off this year, but Goldman sees a turnaround

    K-pop stocks have taken a beating this year, with JYP Entertainment shares leading losses in the sector and shedding a third of its market value.
    Goldman Sachs attributes this to investors focusing on album sales, which have fallen off in the second half of 2023.
    The firm instead recommends evaluating these companies by in-person concert attendance, noting Japan will be a key growth market on this metric.

    CHICAGO, ILLINOIS – AUGUST 03: (L – R) Danielle, Hyein, Hanni, Minji and Haerin of NewJeans perform in concert during Lollapalooza at Grant Park on August 03, 2023 in Chicago, Illinois.
    Gary Miller | Filmmagic | Getty Images

    It hasn’t been an easy start to the year for investors in the K-pop sector as lower fourth-quarter sales and profits, as well as dating scandals, hit stock prices.
    Goldman Sachs, however, expressed optimism for the industry in a March 14 report, saying the K-pop sector is “misunderstood.”

    Shares of K-pop’s “big four” companies have all fallen since the start of the year. JYP Entertainment’s stock has plunged over 37% year to date, while YG Entertainment shed nearly 17%. Kospi-listed Hybe, home of superstars BTS, saw a smaller drop of about 4.5%.
    Shares of SM Entertainment have plunged over 17%. The decline comes as one of the agency’s artists was embroiled in a dating scandal that drew widespread international and domestic coverage.
    In February, the stock fell for five straight sessions to its lowest level since October 2022 following the drama surrounding Karina, the leader of girl group Aespa. The sell-off wiped $50 million off SM’s market value as Chinese fans threatened to boycott the group’s albums.

    Nonetheless, Goldman Sachs said it sees a “high potential for valuation re-rating,” as companies still continue to deliver multi-year earnings growth. For 2023, all four companies posted higher full-year revenue and net profits.

    A superior valuation metric

    Goldman said the sell-off is tied to markets focusing on album sales, which has historically been considered a key proxy for the number of fans and, by extension, prospects for the companies.

    “We challenge this mainstream mindset, arguing that offline concert audience… is the superior metric to measure the growing reach of K-pop,” the analysts wrote. They explained album sales can be tainted by wallet share, where one fan can buy multiple albums — a common occurrence among the K-pop fanbase.
    The analysts also said album sales spiked during the pandemic due to the lack of offline interactions, which distorted the metric in relation to fans.

    Japan to power short-term growth

    When evaluating the industry by in-person concert attendance, Goldman said “growth has not stopped scaling at a rapid pace,” and “in the near term, we see audience growth in Japan as the key growth driver.”
    The analysts see a substantial fanbase growth opportunity for K-pop companies in the near-term in Japan, “which we believe is being overlooked by the market.”

    They note Japan has been one of the largest overseas fanbases for K-pop, with Hybe, SM and JYP taking a combined 7% of the live music market in Japan. Goldman pointed out that Japan’s top talent agency Johnny & Associates has been mired in a major scandal, leading to the industry turning more favorable to K-pop artists.
    In 2023, Kouhaku Uta Gassen, the largest music show in Japan, invited five K-pop artists and two localized groups produced by K-pop companies. It was the first time the show has featured male K-pop artists since 2011 and the largest number of K-pop groups ever featured in its line up.
    Goldman estimated Japan concert audiences will grow at a 24% compounded annual growth rate from 2023 to 2026, with the combined share for Hybe, JYP and SM doubling from 7% to 14%.
    Catalysts for growth in Japan include SM’s newest Japanese boy group NCT Wish as well as JYP’s upcoming boy group NEXZ.

    The global fanbase

    Goldman is also bullish on K-pop’s global fanbase growth, especially in markets like the U.S.

    The report pointed to the success of Hybe-managed girl group NewJeans on U.S. charts. In a March 27 report, analysts noted NewJeans’ most recent album hit No. 1 on the U.S. Billboard 200. The group’s lead single, “Super Shy,” charted at No. 2 on the Billboard Global 200.
    The group also was the first South Korean girl group to perform at Lollapalooza. The Chicago Sun Times reported the group may have managed to draw the biggest audience ever for the festival’s 5 p.m. slot.
    Le Sserafim, managed by Hybe subsidiary Source Music, also made their debut at the Coachella music festival on April 13, with another show scheduled for April 20.
    Hybe also recently announced that it will expand its partnership with Universal Music Group, including exclusive distribution rights for Hybe’s artists and labels. UMG’s roster includes Taylor Swift, Ariana Grande and Justin Bieber.
    Goldman said the announcement is a visible sign that K-pop is becoming mainstream globally, leading to a competitive position that allows stronger bargaining power in business relationships.
    The analysts concluded there’s “a long runway of growth ahead” for the sector, adding that “further downside for wallet share, which has normalized close to pre-Covid levels, seems limited, in our view.” More