[Featured Stock] KakaoPay Hits 10% Intraday Drop Amid Multiple Negative Factors... Continuing 'New Low' Streak

[Asia Economy Reporter Ji Yeon-jin] On the 7th, Kakao Pay plunged more than 10%, hitting a new intraday low. Analysts attribute the decline in stock price to the news that Kakao Pay will participate in the capital increase of its subsidiary, Kakao Pay Securities.

On this day, Kakao Pay was trading at 42,100 KRW, down 10.25% from the previous day. During the day, Kakao Pay's price fell as low as 41,750 KRW, setting a new 52-week low.

On the previous day, the 6th, Kakao Pay also recorded a 52-week low, dropping to 46,700 KRW at one point during trading. The news that Kakao Pay would participate in the capital increase of its subsidiary Kakao Pay Securities is seen as having a negative impact.

Kakao Pay Securities decided on a shareholder allocation capital increase worth 157.9 billion KRW on the 27th of last month. This involves issuing an additional 1,877,797 new shares with a face value of 50,000 KRW each, accounting for 19.6% of the total issued shares. The issue price was set at 84,071 KRW per new share.

This price is about twice the current stock price of Kakao Pay, and since Kakao Pay was the only major shareholder of Kakao Pay Securities to participate in this capital increase, it was interpreted as a negative factor. The major shareholders of Kakao Pay Securities are Kakao Pay (63.34%), Shinhan Capital (21.97%), Mr. Park Ji-ho (10.46%), and other shareholders (4.23%). Mr. Park Ji-ho is the second son of Park Soon-seok, chairman of the Shinhan Group, who founded Baro Investment Securities, the predecessor of Kakao Pay Securities, and Shinhan Capital.

Since only Kakao Pay participated in this capital increase, the financial burden on Kakao Pay has increased. Kakao Pay Securities plans to use the funds raised through this capital increase as operating capital. Kakao Pay Securities has been recording consecutive losses, with net income of 6.9 billion KRW in 2019, a net loss of 6.7 billion KRW in 2020, and a net loss of 17 billion KRW in 2021.

Additionally, the fact that some Kakao Pay shares, which had been locked up as protective deposits until now, may be released into the market as Kakao Pay marks its first anniversary of listing is also fueling the stock price decline.