Kakao Games' 'Subscription Frenzy' Spillover Effect... Positive Breeze for Game and Content Stocks

Netmarble Hits Annual High... Com2uS and Gamevil Also on the Rise
KRX Media & Entertainment Index Reaches Record High

On the 31st of last month, individual investors were waiting at the Korea Investment & Securities branch in Yeouido, Seoul, for consultation on Kakao Games IPO subscription. (Provided by Korea Investment & Securities) [Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] Kakao's gaming subsidiary Kakao Games has sparked the biggest success in domestic initial public offerings (IPO), bringing a positive wave across the gaming and content sectors.

According to the Korea Exchange on the 3rd, Netmarble reached a 52-week high of 185,500 KRW at 10:13 AM, up 7.23% from the previous day. This is the highest price since January 4, 2018. The increase in game consumption due to the rise of non-face-to-face lifestyles amid the COVID-19 pandemic, along with the news that Kakao Games holds a 5.63% stake (3,218,320 shares), has been highlighted. On the previous day, Kakao Games set a record with 58.5543 trillion KRW in subscription deposits from general investors during its IPO subscription, the highest ever. This amount exceeded SK Biopharm's 30.9899 trillion KRW in June by about 28 trillion KRW. Additionally, holding a 24.87% stake in Big Hit Entertainment, the agency of BTS, which is scheduled to be listed next month, also acted as a positive factor, boosting Netmarble's stock price.

Game stocks without direct connections are also generally on the rise. Mid-sized game companies such as Com2uS and Gamevil, which had somewhat sluggish stock prices, have been sharply rising since the end of last month. Com2uS, which fell about 20% from 129,400 KRW on the 7th to 104,500 KRW on the 21st of the same month, rose to 131,700 KRW as of 9:25 AM on this day. This is an 18.5% increase in three trading days since Kakao Games recorded an unprecedented competition rate in its institutional demand forecast on the 31st. Gamevil showed a similar trend, rising 12% over three trading days since the 31st, continuing its upward momentum.

The KRX Media & Entertainment Index, which includes major game companies as well as Kakao and NAVER, is also on the rise. It rose about 3% in one day to reach a yearly high of 3,215.80. As of 9:25 AM on this day, it maintained the 3,200 level at 3,206.40. Compared to the 1,600 level recorded until March last year, it has doubled. Analysts attribute the IPO frenzy of Kakao Games to have sparked interest in the gaming and content industries overall, bringing a positive wave. A financial investment industry official explained, "While domestic game companies have generally performed well amid COVID-19, the Kakao Games craze has led investors who were not interested in the gaming sector to view the industry differently," adding, "This has acted as a positive factor for the growth of the entire sector."