Kakao's Stock Rises Strongly After Stock Split... The Second Samsung Electronics and Naver?

Acts as a Positive Factor... Sole Rise in a Bear Market
Expectations for Stock Price Strength

[Asia Economy Reporter Song Hwajeong] As Kakao decided to split its par value, the market is also welcoming the move. Since Samsung Electronics and Naver (NAVER), which previously conducted par value splits, saw their stock prices strengthen afterward, Kakao's par value split is also being interpreted positively.

As of 9:10 a.m. on the 26th, Kakao was trading at 489,500 KRW, up 5,000 KRW (1.03%) from the previous day. While the KOSPI showed a decline of around 2%, and all major market cap stocks were falling, Kakao was the only one showing a positive trend.

On the previous day, Kakao held a board meeting and announced that it decided to split the par value of common stock from 500 KRW to 100 KRW per share to increase the number of circulating shares. As a result of the par value split, Kakao's issued shares will increase from 88,704,620 shares to 443,523,100 shares. Accordingly, trading will be suspended from April 12 to 14, and the new shares will be listed on the 15th.

Since Samsung Electronics and Naver, which previously conducted par value splits, have seen their stock prices reach all-time highs this year, expectations for Kakao's par value split are also high. Samsung Electronics conducted a 50-for-1 par value split in May 2018, lowering its stock price from 2.65 million KRW to 53,000 KRW. Since the split on May 4, 2018, Samsung Electronics' stock price has risen more than 60%. On the 11th of last month, it even reached an intraday high of 96,800 KRW, marking an all-time high after the split.

Naver conducted a par value split in October 2018, splitting one share into five shares. As a result, the stock price dropped from around 700,000 KRW to 130,000 KRW. After the split, Naver's stock price rose more than 177%.

With the increase in the number of circulating shares after the par value split, it is expected that accessibility for small shareholders will improve. In the case of Samsung Electronics, the number of small shareholders holding less than 1% of shares increased fivefold from 241,414 as of March 31, 2018, before the split, to 1,454,373 as of June 30 last year.