[Into the Stocks] Once the No.1 Financial Stock by Market Cap, KakaoBank... Stock Price Drops 8% on a Single Report

[Asia Economy Reporter Kwon Jae-hee] KakaoBank, once recognized for its growth potential as a fintech company and even ranked number one in market capitalization among financial stocks, is struggling with its stock price. The stock price plummeted nearly 8% in a single day following a 'sell' recommendation from a domestic securities firm. This was due to continued selling pressure from foreign and institutional investors, and with no momentum for a price rebound in sight, the future outlook for KakaoBank's stock price remains uncertain.

According to the Korea Exchange as of 9:25 a.m. on the 4th, KakaoBank was trading at 29,600 KRW, up 2.25% from the previous trading day. On the 29th, DB Financial Investment issued an 'Underperform' rating on KakaoBank, and on that day, KakaoBank's stock closed down 7.85% at 31,100 KRW. 'Underperform' indicates an expectation that the stock will decline more than the market average, effectively a sell recommendation. The decline in KakaoBank's stock was driven by foreign and institutional investors selling approximately 41 billion KRW worth of KakaoBank shares in a single day. According to financial information provider FnGuide, this is the first time DB Financial Investment has issued a sell rating in its individual stock reports published this year. KakaoBank's stock continued to decline afterward, hitting a record low of 28,600 KRW on July 1, since its debut on the KOSPI market on August 6 last year. This represents a roughly 70% drop from the all-time high of 94,400 KRW recorded on August 18 last year.

KakaoBank, which once held the top market capitalization among financial stocks, received an unusual 'sell' rating due to growing skepticism about its growth prospects. At the time of its IPO last year, the offering price was set at 39,000 KRW. Although some criticized this as an unreasonable price, the industry at the time valued KakaoBank highly by comparing it to foreign fintech companies. The company was valued more as a platform company than as a bank. To be recognized as a platform company, significant profits from the platform are essential, which is difficult to achieve in a short period.

Choi Jung-wook, a researcher at Hana Securities, pointed out, "For KakaoBank to establish itself as a financial platform for investors, explosive growth in fees and platform revenue is essential."

However, in the end, KakaoBank is still a bank. Even when evaluated as a bank, the consensus is that it is difficult to view KakaoBank as a beneficiary of the interest rate hike cycle. Except for Jeonse and monthly rent loans, KakaoBank mainly focuses on unsecured credit loans, raising concerns about increasing loan loss costs. Additionally, the recent rapid increase in the proportion of credit loans to low- and medium-credit borrowers at KakaoBank is also cited as a factor that heightens concerns.

Lee Byung-geon, a researcher at DB Financial Investment, analyzed, "It is clear that KakaoBank's growth rate has been slowing recently. Considering that it is licensed as a bank, it seems difficult to discover new revenue sources different from existing banks."