AfricaTV Continues Upward Trend Based on Loyal Customer Base

Korea Investment & Securities "AfricaTV Target Price Raised to 125,000 Won"

[Asia Economy Reporter Gong Byung-sun] Based on structural changes, AfreecaTV continues its upward trend. With growth in both the platform and advertising sectors, there are expectations that the stock price could surpass 100,000 KRW.

According to the Korea Exchange, on the 4th, AfreecaTV closed the session at 90,500 KRW, up 1.12% (1,000 KRW) from the previous trading day. The stock price, which was in the 70,000 KRW range at the beginning of last month, has now risen to the 90,000 KRW range. The upward trend has continued since the Q1 earnings announcement on the 30th of last month.

AfreecaTV's Q1 revenue this year was 60.9 billion KRW, a 46.7% increase compared to the same period last year. Operating profit also rose to 19.6 billion KRW, up 142.5% year-over-year. These figures significantly exceeded market expectations (consensus). Additionally, growth continued from last year's Q3 operating profit of 13.9 billion KRW to 17.7 billion KRW in Q4.

The structural changes in the platform segment have driven the upward momentum. Although monthly active users (MAU) have plateaued, average revenue per user (ARPU) and paying users (PU) are increasing. This indicates a rise in loyal customers who actually pay. Jeong Ho-yoon, a researcher at Korea Investment & Securities, said, “These changes are not temporary but have continued for several years, so they can be considered structural changes.”

Advertising revenue declined. In Q1 this year, advertising revenue was 8.4 billion KRW, down 39.4% from the previous quarter. This decrease is attributed to a reduction in branded content advertising revenue. However, researcher Jeong noted, “Due to the launch of new advertising products, platform advertising rose 12.2% quarter-over-quarter despite the off-season,” and forecasted, “With the effect of new advertising products launched this year, advertising is expected to perform better than in the past.”

Accordingly, Korea Investment & Securities raised AfreecaTV’s target stock price from 110,000 KRW to 125,000 KRW. This implies that surpassing 100,000 KRW is quite feasible based on high growth in platform and advertising revenues.