[Asia Economy Reporter Myunghwan Lee] Most of Kakao's services, including KakaoTalk, were suspended for nearly a day on the 15th due to a data center fire. Securities firms have analyzed that the damage from this incident alone could reach 22 billion KRW. Considering the remaining procedures such as user compensation, there is also a forecast that the fourth-quarter earnings could further deteriorate.
On the 17th, KB Securities stated, "As disruptions occurred in major services of the Kakao community, comprehensive damage has occurred across Kakao's main businesses including advertising, e-commerce, and content." KB Securities estimated that if Kakao's expected fourth-quarter sales are calculated on a pro-rata basis, the simple damage scale would be about 22 billion KRW.
The scale of losses Kakao will face due to compensation could also increase. Jinwoo Kim, a researcher at Daol Investment & Securities, said, "If compensation extends to sales amounts of businesses connected to Talk Channel and KakaoPay, it is still difficult to estimate the scope," adding, "Assuming the compensation scope is limited to paid users, the impact on operating profit is estimated to be about 12 billion KRW, which would be a 7% downward factor from the existing fourth-quarter estimates."
The stock prices of Kakao and its affiliates, which have recently experienced sluggishness, also seem unlikely to avoid a short-term sharp decline. Jaemin Ahn, a researcher at NH Investment & Securities, pointed out, "This incident may have a negative impact on short-term sentiment surrounding Kakao," adding, "Since last year, the stock prices of Kakao and its subsidiaries have continued to decline, and with recent incidents such as some executives of listed subsidiaries selling shares, public opinion around Kakao has been unfavorable, and now this incident has occurred."
Given the unprecedented service outage, there is also analysis that it will affect the fourth-quarter earnings. Donghwan Oh, a researcher at Samsung Securities, diagnosed, "The revenue impact of this service outage is expected to appear mainly as lost sales and user compensation," adding, "The fourth-quarter sales could decrease by up to 1-2%."
However, some expect that the possibility of users migrating to other platforms is low. This is because Kakao's monopoly is more pronounced compared to other platforms. Researcher Oh said, "During the weekend, temporary user migration to alternative services such as Telegram, Toss, and UT occurred due to the inability to send and receive messages," but added, "Since Kakao services still have irreplaceable advantages, structural user migration upon service normalization is expected to be limited."
Researcher Ahn also said, "This incident served as an opportunity to reaffirm Kakao's influence in Korea," adding, "Since there are not many services that can replace Kakao in the short term, if the recovery is well completed, a rebound is expected once again."
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