The New Season of Squid Game Shocks South Korean Stocks

On Friday, shares of South Korean companies linked to Netflix Inc.'s "Squid Game" series experienced a significant decline following the release of the show's new season. Shares of Artist United Inc., the film distributor in which "Squid Game" actor Lee Jung-jae is the largest shareholder, fell by the daily maximum of 30%. Shares of Wysiwyg Studios Co., which invested in Artist United, dropped by up to 25%, while the stock price of Dexter Studios Co., which collaborated with Netflix, decreased by 24%.

The first release of "Squid Game" in 2021 had achieved great global success, leading to a surge in the share prices of local entertainment companies. The series not only became the most-watched title on Netflix across all continents but also earned the distinction of being the first non-English program nominated for the Emmy Award for Best Drama.

With such high expectations, the anticipation for the second season of the dystopian drama was substantial. The new season, which premiered on December 26, received an 85% approval rating from critics and a 65% rating from audiences on Rotten Tomatoes, despite some negative reviews.

The market's reaction to the latest season's launch starkly contrasts with the initial excitement that elevated entertainment stocks in South Korea two years ago. The success of the first season had boosted investor optimism about the potential benefits of Netflix's search for additional blockbuster productions. However, the recent performance of the related stocks indicates a shift in sentiment following the reception of the newest season.