Joyworks & Co., a KOSDAQ-listed company, is the offline retailer of the popular shoe brand HOKA, which has gained immense popularity among the 2030 demographic. However, the company's stock has plummeted, dropping nearly 61% in the past month to a range of 600 to 700 won, effectively turning it into a penny stock. Concerns about delisting have arisen among shareholders as the government has tightened regulations on penny stocks starting in July. Despite efforts to restructure management, consolidate shares, and issue free shares, the stock has not rebounded.
According to the Korea Exchange, Joyworks & Co.'s stock fell by 60.78% over the last month, dropping from around 1,740 won at the beginning of last month to 686 won on July 3. This marks the sixth-largest decline among KOSDAQ-listed companies. The market capitalization has also decreased significantly, from 63 billion won a year ago to 13.2 billion won, a reduction of approximately 79%.
Joyworks & Co. is the exclusive distributor of HOKA in South Korea and holds the rights to its offline business. Given HOKA's rapid growth amid a running boom in the country, the stock's decline is puzzling.
The stock's downturn began earlier this year when former CEO Cho Sung-hwan was accused of assaulting an employee from a competing firm. This incident sparked a consumer boycott and dampened investor sentiment. As the controversy escalated, questions arose about the continuation of the HOKA distribution contract. In response, the company issued a public apology and announced Cho's resignation on January 7, just two days after the incident. However, the market reacted negatively, with the stock dropping 30% to below 1,000 won on the next trading day.
Following this, Joyworks & Co. attempted to turn things around by highlighting improved performance. The company reported a revenue increase of 6 billion won and an operating profit increase of 2.2 billion won in the fourth quarter of the previous year, attributing this to cost structure improvements and operational efficiency. In April, the company decided on a 5-for-1 stock consolidation and subsequently conducted a free share issuance of approximately 14.36 million shares. After the announcement, the stock rose to the upper 2,000 won range and even peaked at 3,650 won shortly after trading resumed.
However, this upward trend was short-lived. By June, the stock fell back below 1,000 won, officially becoming a penny stock on June 19. Despite reporting first-quarter revenues of about 21.2 billion won and an operating profit of 3.4 billion won, the stock has struggled to recover.
Investor anxiety remains high as concerns about trading suspensions and delisting grow. Voices in investor communities are increasingly worried about the possibility of delisting, especially with the government tightening exit reviews for companies with market capitalizations below 20 billion won and stock prices below 1,000 won starting this month.
The company is exploring new business opportunities to reverse its fortunes. An extraordinary general meeting scheduled for July 20 will include a significant addition of nuclear-related business objectives, such as the sale, transport, and disposal of radioactive isotopes, decontamination and dismantling of radioactive waste, and manufacturing and selling electronic devices. Industry observers interpret this as a strategy for business diversification and enhancing corporate value. A company representative stated, "We will announce related matters as soon as they are decided."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.