Major Securities Firms and Naver Target Prices Drop One After Another
After Falling Over 8% on the 4th, Plunged 15% in Two Days
[Asia Economy Reporter Ji Yeon-jin] Naver (NAVER) continued its record high streak for the second day following the news of its acquisition of the U.S. secondhand trading platform Poshmark.
On this day, Naver closed at 164,000 KRW on the KOSPI market, down 7.08% from the previous day. The day before, when Naver announced the acquisition of Poshmark, the stock price plunged 8.79%, setting a record high, and it has fallen more than 15% over two days. While the KOSPI index rebounded for two consecutive days, Naver experienced a significant decline.
Naver announced the day before that it would acquire 91,272,609 shares of Poshmark for approximately 2.3441 trillion KRW, but the acquisition price was considered somewhat expensive, which appears to have dragged down the stock price.
On this day, major securities firms unanimously lowered their target prices for Naver. Korea Investment & Securities lowered Naver’s target price from 330,000 KRW to 300,000 KRW, and NH Investment & Securities (360,000 KRW → 270,000 KRW), Daol Investment & Securities (380,000 KRW → 260,000 KRW), Samsung Securities (350,000 KRW → 280,000 KRW), Ebest Investment & Securities (350,000 KRW → 282,000 KRW), and IBK Investment & Securities (350,000 KRW → 315,000 KRW) also consecutively revised their target prices downward.
Nomura Securities, a foreign investment bank (IB), also lowered Naver’s target price from 340,000 KRW to 180,000 KRW and changed its investment opinion from “buy” to “neutral.” Jeong Ho-yoon, a researcher at Korea Investment & Securities, explained, “Poshmark’s sales growth rate in the first half of this year was in the low double digits at around 10%, down from 27.6% and 24.6% in 2020 and last year, respectively. Naver’s acquisition price for Poshmark is about 1.2 billion USD, and based on this year’s earnings estimates, the price-to-sales ratio (PSR) valuation, including the control premium, is about 3.2 times.” He added, “While the acquisition price is not unreasonable, if the growth rate does not recover, there could be controversy over the appropriateness of the price.”
Oh Dong-hwan, a researcher at Samsung Securities, also evaluated, “The acquisition of Poshmark is part of Naver’s global expansion strategy, but since the platform continues to operate at a loss and there is low visibility for profitability improvement, it is insufficient to alleviate current market concerns.”
However, some opinions suggested that Naver’s recent price drop was excessive. Ahn Jae-min, a researcher at NH Investment & Securities, said, “One of Naver’s weaknesses is its lack of global influence, but through this acquisition, it has secured a commerce platform and user base in the U.S. market, which is positive,” adding, “Naver’s exposure in the global market could expand.”
Meanwhile, Naver’s stock price has continued to weaken this year as the U.S. Federal Reserve (Fed) tightened monetary policy. Compared to the beginning of the year, the stock price has dropped 55.13%, and it has fallen 63.72% from last year’s peak. This decline is much larger than the KOSPI index’s 25.88% drop so far this year.
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