Falls to 37,850 Won Intraday Shares Down Nearly 43% Year-to-Date "Need to Confirm Improvement in KakaoTalk Engagement Time"
Kakao (035720.KS) fell more than 5% in early trading Friday, setting a new 52-week low. The decline is attributed to weakened investor sentiment, as clear results such as an increase in KakaoTalk engagement time have yet to be confirmed despite expectations for the introduction of artificial intelligence (AI) services.
According to the Korea Exchange, Kakao was trading at 38,050 won as of 10:19 a.m., down 2,200 won, or 5.47%, from the previous session. The stock opened at 37,850 won and fell as low as 37,600 won during the session, setting a new 52-week low. Trading value reached 21.9 billion won.
Kakao shares have fallen 42.95% this year alone. Compared with 66,700 won at the start of the year, the price is 28,650 won lower. According to Naver Pay Securities, the average purchase price of Kakao's 96,733 investors was 83,068 won. The average return stands at -53.77%.
Securities firms are also lowering their expectations for Kakao. Target prices presented recently include 58,000 won from Mirae Asset Securities, 60,000 won from Daol Investment & Securities, and 69,000 won from KB Securities. While the restructuring of subsidiaries and cost efficiency are seen as positive, doubts about growth in the core business are blocking a re-rating of the stock, analysts said.
Kakao is expanding AI functions centered on KakaoTalk and pushing for a rebound in its advertising and commerce businesses. However, the market believes it is necessary to confirm whether the introduction of AI leads to an actual increase in user engagement time and improvement in advertising revenue. Analysts say that unless usage time and traffic, key metrics for platform companies, recover, a stock rebound could be limited based on profitability improvement expectations alone.
Lim Hee-seok, an analyst at Mirae Asset Securities, said, "The improvement in profitability through the restructuring of subsidiaries is positive," but added, "It will be difficult for a re-rating of the stock to occur until visible results emerge, such as the accelerated growth in KakaoTalk engagement time through the AI introduction that the market expects."
Original reporting by Shin Ji-min for Seoul Economic Daily.
AI-translated from Korean. Quotes from foreign sources are based on Korean-language reports and may not reflect exact original wording.
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