Joyworks & Co., a KOSDAQ-listed company, is the offline retailer for the popular shoe brand HOKA, which has gained immense popularity among consumers in their 20s and 30s. However, the company's stock price has plummeted, dropping nearly 60% in the past month to the 600-700 won range, effectively turning it into a penny stock. Concerns about delisting have arisen among shareholders as the government has tightened regulations on penny stocks since July. Despite efforts to restructure management, consolidate shares, and issue free shares, the company has struggled to rebound.
According to the Korea Exchange, Joyworks & Co.'s stock price fell by 60.78% over the past 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. Its market capitalization has also decreased from 63 billion won a year ago to 13.2 billion won, a decline of about 79%. Joyworks is the exclusive distributor for HOKA in South Korea and holds the rights to its offline business, making the stock's decline puzzling given HOKA's rapid growth amid a running craze in the country.
The stock's decline can be traced back to allegations against former CEO Cho Sung-hwan, who was accused of assaulting a competitor's representative earlier this year. 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 price dropping 30% to below 1,000 won on the next trading day.
Following this, Joyworks attempted to turn its fortunes 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. Measures to restore corporate value included a 5-for-1 stock consolidation in April and a free share issuance of approximately 14.36 million shares. After the announcement of the free share issuance, the stock price 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 price fell back below 1,000 won, and on June 19, it officially became a penny stock. Despite reporting first-quarter revenues of approximately 21.2 billion won and an operating profit of 3.4 billion won, the stock has not managed to recover.
Investor anxiety remains high as concerns about trading suspensions and delisting grow. Voices in investor communities express worries about the possibility of delisting, especially with the government tightening delisting 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 significant additions to its business objectives, focusing on nuclear-related ventures. These include the sale, transportation, and disposal of radioactive isotopes, decontamination and dismantling of radioactive waste, and manufacturing and selling electronic devices. Industry insiders 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.
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